Usdjpy Moves Lower

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Usdjpy Moves Lower

Usd/Jpy Moves Lower On Japanese Inflation

USD/JPY is trading near the 154.70 after the release of the Japanese inflation data. The data was JPY-positive and sent the USD/JPY pair lower.

Another reason for the strength of the JPY is the stimulus package announced by Japan. The package will be worth $250 billion and has already started to show its effects on the Japanese Yen.

Us Dollar To Attract Capital Inflows

Meanwhile, the US Dollar also appears to be holding its ground as the interest rates in the USA will remain high. So, that's a factor that is attracting capital inflows towards the US Dollar.

Recently, the Fed Williams and the Fed Collins also talked about how inflation is cooling down. This automatically means the interest rates will decline as well. In fact, even the market forces are forecasting a rate cut in December.

The FedWatch Tool shows a 59% chance of a 25 bps rate cut in December. However, it is important to note that the odds were near 100% earlier.

In Japan, the forecast shows that a rate hike from BoJ is highly likely in December. So, the overall picture appears to be benefiting the JPY against the USD.

The recently released Japanese CPI (October) showed a stronger reading as compared to the earlier results. The results were higher than the 2.2% forecast.

Also, employee pay will also jump higher in Japan, which will fuel growth and consumer spending. A direct result of these changes will lead to more rate hikes by the Bank of Japan.

The overall picture shows that everything hints at more rate hikes by the Bank of Japan. Also, a lot of big Japanese companies are also expected to green signal the pay hikes.

Unless inflation starts to rise again in the USA, the odds are in favor of the JPY, which is still trading at record lows. So, for now, it seems that the long-term trend in the USD/JPY is in favor of the bears.

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