Usdjpy Sinks Lower

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Usdjpy Sinks Lower

Usd/Jpy Sinks Lower As Rate Cut Risk Looms

USD/JPY continues to trend lower and was last seen near 144.10 on Monday. The downtrend of USD/JPY started on August 15th, and the pair has now come a long way down from 149.40.

If we look at this from another angle, it means that 1 US dollar is now equal to around 144 yen.

Usd/Jpy Falls From 149.40

The USD/JPY was already trending lower, but it intensified with the Powell comments at Jackson Hole. In his speech, Powell gave a clear signal of cutting the rates. That's something that hasn't happened in the last few years.

These comments were enough to send the USD/JPY tumbling down. Eventually, the pair lost 1.3% of its value after the Powell comments.

If we look at Japan, the BoJ is struggling with lower inflation which is at a 180 degree from other countries. In order to increase inflation, the BoJ kept the rates at historic lows. However, even that has changed in the last few months as the BoJ has actually turned the negative rates into positive.

Right now, the headline inflation in Japan is recorded at 2.8% during July on a y/y basis. This is similar to the reading from June. Meanwhile, the core inflation is around 2.7%, with a change of +0.1% from last month.

The overall inflation level in the country has gone down from 2.2% in July to around 1.9%. This is still lower the 2.0% target set by the BoJ.

The current reading of inflation is a sign that the Bank of Japan doesn't have a strong reason to hike the rates right now. As a result, the Japanese Yen will remain under pressure.

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