The Japanese yen retreated after a strong rally and fell against the USD


Yesterday’s trading day, Tuesday, September 12, 2023, in forex operations of the foreign exchange market saw a strong one-day rise in the Japanese yen (JPY) against the US dollar (USD) as the Japanese currency strengthened on comments from Japan’s top central banker, while the US dollar (USD) strengthened as investors awaited the latest inflation data. It was the investor sentiment before the publication of the results of the Consumer Price Index (CPI) in the United States of America that caused the exchange value of the USD to strengthen.

Currently, during the European morning of this Wednesday, September 13, 2023, this currency pair of the US dollar (USD) and the Japanese yen (JPY) was traded in the forex operations of the foreign exchange market at the value of the mutual exchange rate at approximately 6:11 CET amounting to 147.36 JPY per USD with the daily strengthening of the USD by +0.19% against the JPY. This mutual exchange rate was achieved when the exchange value of the US dollar on a global scale, as measured by the dollar index DXY (US Dollar Currency Index), showed a point level of 104.66 USD points with a daily decrease of -0.04% of the point value so far according to this index, which compares the value of the USD with another six major world currencies. The Japanese yen (JPY) thus fell not only against the USD, but also against another global currency, namely against the single European currency, the euro (EUR), when on the indicated day and time this currency pair EUR/JPY traded at a rate of 158.36 JPY per EUR with by the daily drop of JPY by -0.13% against the EUR.

This JPY to EUR exchange rate reflects the current state of the global foreign exchange market, where on the indicated day and time the global currency pair of the single European currency Euro (EUR) and the US dollar, as the world’s reserve currency, was trading at a mutual exchange rate of USD 1.075 per EUR with the daily strengthening of USD by + 0.056% against EUR. The American dollar (USD) thus regained the status of a strong and dynamically strengthening currency of the international foreign exchange market following the expectation of positive data regarding inflation in the USA according to the reported data of the CPI index. This consumer price index in the USA will be published today, September 13, 2023, roughly at the beginning of the European afternoon at 14:30 CET. The consumer price index characterizes inflationary dynamics, and its growth can have just that positive effect on US dollar quotations. According to foreign exchange market strategists and analysts of brokerage companies, foreign exchange market participants are counting on this situation and the positive results of the CPI index, and the current investor sentiment is based on this.

The previous strengthening of the Japanese yen (JPY) before the effect of the CPI index was reflected in the comments of the governor of the Bank of Japan (BoJ), the central bank of Japan, Mr. Kazua Uedi, who in his speech raised expectations that the central bank could move away from its policy of negative interest rates rates. Influential ruling party lawmaker Mr. Hiroshige Seko, however, indicated on Tuesday 9/12/2023 that he prefers an ultra-loose monetary policy. The Japanese yen (JPY) thus came under pressure against the US dollar (USD) as the BoJ remains a dovish outlier among global central banks, especially after the US Federal Reserve (FED) began an aggressive rate hike cycle and that as early as last March 2022. “Even if the Bank of Japan backed off from setting negative rates, the reality is that interest rate differentials would remain absolutely huge,” said Karl Schamotta, chief market strategist at Corpay in Toronto. Traders and investors of the foreign exchange markets continue to closely monitor the development of possible interventions by the BoJ against the USD with regard to their potential profits.