Usdjpy Turns Higher

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Usdjpy Turns Higher

Usd/Jpy Turns Higher Towards 157.50 On Boj Cautious Policy

USD/JPY continues on a bullish path and is seen trading near the 157.50 handle on Monday. The Fed has turned hawkish, which took everyone by surprise, sending the JPY lower while supporting the USD.

In the last meeting, the Bank of Japan (BoJ) kept the rates near 0%, as expected by the market players. While this was already forecasted, the JPY still took a dive against the USD.

Us Consumer Sentiment Index Down To 69.1

Here's the situation right now: We will only get 1 rate cut this year and even that could change into no rate cuts if the situation change. On the other hand, the BoJ is not likely to jack up the rates as the economy is still fragile, and the effects of wage hikes are still yet to show up.

According to Fed Powell, the US Federal Reserve is still not confident that a rate cut at this stage will be beneficial for the disinflation trend. Similarly, Fed Kashkarhi believes that the first rate cut will have to wait till December 2024.

On Friday, the Michigan Consumer Sentiment Index showed that the value has declined from 69.1 to around 65.6 in June. This was a lot lower than the 72.0 forecast made by the economic experts.

Meanwhile, the BoJ policy rate is 0 - 0.1% and the central bank is expected to reduce the bond buying starting from July. The BoJ governor also added that they can't 100% rule out the chances of rate hikes in July 2024 as a weak JPY means higher import costs.

It looks like the BoJ is very careful when it comes to cutting down on the bond-buying program. This directly means the BoJ is also cautious when it comes to rate hikes. So, it is safe to say that the BoJ has a dovish stance, which means more downside for the USD/JPY.

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