Analysis USD/JPY. The Yen is retreating again

uasd-jpyUSDJPY is slowly rising; demand for “safe haven” assets is rather low.

The Japanese Yen is retreating against the USD again. The current quote for the instrument is 122.87.

According to the statistics published today, Household Spending gained 1.1% y/y in February after adding 6.9% y/y in January. Early in the year, there was hope that households finally started spending money because they have faith in the economy and future outlook. However, February didn’t confirm this tendency.

As the Governor of the Bank of Japan Haruhiko Kuroda told in his speech, the Japanese economy stood a good chance of recovery. Inflation is accelerating due to, among other things, an upsurge in energy prices and the low effect of mobile service bills. At the same time, one shouldn’t exclude the possibility that an inflation boost may hurt the Japanese economy: pressure on household incomes and corporate profits.

Some members of the Bank of Japan believe that inflation might reach 2% in April and stay there for a while.

The BoJ once again confirmed that it was going to continue its soft monetary policy to support the economy. The half-year report says that it is too early to discuss strategies to close the QE. If the regulator wants to make inflation stable, including the growth of salaries but not expenses, this approach becomes quite comprehensible.

At the moment, the Yen is falling as demand for “safe haven” assets is rather low. It’s good news for the Japanese economy – theoretically, the strong national currency might hurt it badly.

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