The Japanese Yen has reached an impressive high against the US Dollar, hitting 151.93 this past Thursday, its highest in the past 12 weeks. The upswing is attributed to investors closing carry trades, in anticipation of the outcomes of the impending Bank of Japan’s (BoJ) policy meeting.
Despite the remarkable development in the country’s foreign exchange market, key figures in the Japanese Finance sector, including Finance Minister Shunichi Suzuki and Chief Cabinet Secretary Yoshimasa Hayashi, have refrained from making comments, maintaining an intriguing silence even as the USD/JPY exchange rate continues to waver.
A recent US Private Manufacturing Index (PMI) report indicates that the US private sector expanded in July, suggesting ongoing economic growth regardless of heightened interest rates. It also implies that the Federal Reserve may proceed with its stringent policy approach unless substantial inflation evidence surfaces.
Additionally, the nation’s unemployment rates stay relatively low, indicating strong economic activities that reflect well on consumer spending. It is also notable that current investment levels in infrastructure and technology are promising and could potentially increase productivity in the long run.
Major investors are on the lookout for essential US economic data expected this week, information that will offer insights into the present state of the US economy.
Yen reaches 12-week peak against Dollar
The data, which will inform on whether there’s continual economic growth and the progression of inflation rates, could significantly influence future investment strategies.
The Japanese stock market, in particular the Nikkei 225 Index, has witnessed a downturn, falling 2.5% below 38,200, after not-so-inspiring quarterly results from Tesla and Alphabet. This sluggish performance in the technology sector, in light of disheartening results from industry giants, played a part in dragging down the overall market.
June saw Japan’s Corporate Service Price Index (CSPI) rise by 3.0% year-on-year, the highest increment in nine years, signaling potential concern over inflation. However, the Services PMI in Japan noted its sixth increase this year, signaling a potential resilience in Japan’s service sector to effectively counter inflation impacts.
Last but not least, Japan’s Prime Minister, Fumio Kishida, has hinted that the normalization of the Bank of Japan’s monetary policy could assist in shifting Japan toward a growth-oriented economy. A change, according to him, could stimulate personal consumption and corporate investment, creating a sustainable and growth-oriented economic environment.
