Japanese Yen Appreciates On Continued Fed Tightening Concerns
18 June 2021 - 05:20PM
RTTF2
The Japanese yen drifted higher against its major rivals during
the European session on Friday, as investors digested the U.S.
Federal Reserve's hawkish shift in monetary policy, signaling
earlier rate hikes and winding down of the bond purchase program to
rein in inflationary pressures.
The Fed penciled in two potential rate hikes in 2023 and
indicated that it had begun talks about the process for withdrawing
bond buying program.
U.S. treasury yields declined amid expectations that rate hikes
would keep inflation under control.
Commodities fell amid a high dollar in the wake of
earlier-than-expected rate hikes amid faster economic growth and
strong inflation.
The Bank of Japan maintained its massive monetary stimulus, as
widely expected, and extended the duration of the special funding
programme to help struggling firms.
The board, governed by Haruhiko Kuroda, voted 7-1, with 1
abstention, to hold the interest rate at -0.1 percent on current
accounts that financial institutions maintain at the central
bank.
The bank will continue to purchase a necessary amount of
Japanese government bonds without setting an upper limit so that
10-year JGB yields will remain at around zero percent.
The Bank decided to extend the duration of the Special Program
to Support Financing in Response to the Novel Coronavirus by six
months until the end of March 2022 with a view to continuing to
support financing, mainly of firms.
The yen rebounded from its early lows of 110.33 against the
greenback and 131.43 against the euro and advanced to a 2-day high
of 109.94 and near a 2-month high of 130.81, respectively. The
currency is likely to challenge resistance around 108.00 against
the greenback and 129.00 against the euro.
The yen moved up to 1-1/2-month highs of 119.70 against the
franc, 152.46 against the pound and 88.84 against the loonie, after
weakening to 120.22, 153.77 and 89.37, respectively in previous
deals. If the yen rises further, it may test resistance around
117.00 against the franc, 149.00 against the pound and 87.00
against the loonie.
Reversing from its prior lows of 83.38 against the aussie and
77.41 against the kiwi, the yen firmed to near a 3-month high of
82.76 and more than a 2-month high of 76.72, respectively. On the
upside, 80.00 and 75.00 are possibly seen as its next resistance
levels against the aussie and the kiwi, respectively.
Looking ahead, Canada new housing price index for May is set for
release in the New York session.
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