USD/JPY rises to near 149.00 as Yen weakens, BoJ-Fed policy in focus
USD/JPY gains to near 149.00 as the Japanese Yen weakens amid an upbeat market mood. This week, investors will focus on the BoJ and the Fed’s monetary policy meeting. US President Trump’s economic policies are expected to dampen the economic outlook.The USD/JPY pair moves higher to near 149.00 in Monday’s North American session. The pair gains as the Japanese Yen (JPY) underperforms amid a cheerful market mood. The appeal of risky assets has improved amid optimism over the United States (US)-Russia peace talks on Tuesday.
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Euro.
USD EUR GBP JPY CAD AUD NZD CHF USD -0.22% -0.24% 0.03% -0.41% -0.42% -0.93% -0.34% EUR 0.22% -0.13% -0.16% -0.18% -0.33% -0.72% -0.14% GBP 0.24% 0.13% 0.29% -0.26% -0.22% -0.60% -0.08% JPY -0.03% 0.16% -0.29% -0.43% -0.66% -0.90% -0.49% CAD 0.41% 0.18% 0.26% 0.43% -0.22% -0.52% -0.48% AUD 0.42% 0.33% 0.22% 0.66% 0.22% -0.36% 0.23% NZD 0.93% 0.72% 0.60% 0.90% 0.52% 0.36% 0.58% CHF 0.34% 0.14% 0.08% 0.49% 0.48% -0.23% -0.58%The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Earlier in the day, White House officials confirmed that US President Donald Trump will speak with Russian leader Vladimir Putin on peace in Ukraine. Last week, Ukraine agreed to a 30-day ceasefire plan after talks with US officials in Saudi Arabia. An end to a three-year-long war in Ukraine will restore supply chain issues. Such a scenario will be favorable for the global economic growth.
On the domestic front, the major trigger for the Japanese Yen is the Bank of Japan’s (BoJ) monetary policy decision and the National Consumer Price Index (CPI) data for February, which are scheduled for Wednesday and Friday, respectively.
Though investors have underpinned the US Dollar against the Yen it is underperforming its other peers amid fears that US President Trump’s tariff agenda will slow down the economic growth.
Flash Michigan Consumer Sentiment Index declined significantly to at 57.9 in March from 64.7 in February.
This week, investors will pay close attention to the Federal Reserve’s (Fed) interest policy decision, which will be announced on Wednesday.
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
How do the decisions of the Federal Reserve impact the US Dollar?The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
What is Quantitative Easing and how does it influence the US Dollar?In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
What is Quantitative Tightening and how does it influence the US Dollar?Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
