The Japanese Yen (JPY) is exhibiting weakness in the foreign exchange market, depreciating by 0.5% against the US Dollar (USD). According to Shaun Osborne, Chief FX Strategist at Scotiabank, the Yen’s performance is lagging behind all other G10 currencies, a consequence of disappointing industrial production and retail sales figures recently released.
JPY is underperforming ahead of BoJ tonight
“Both industrial production and retail sales experienced contractions in March, with the declines significantly exceeding anticipated levels. While these figures paint a concerning picture of the Japanese economy, they are unlikely to sway the Bank of Japan’s (BoJ) monetary policy decision at the upcoming meeting. Market consensus overwhelmingly anticipates the BoJ will maintain its current policy stance, holding steady at 0.50%.” The latest inflation data also remains a key factor influencing the BoJ’s decision-making process. Recent figures have shown a slight uptick in core inflation, but it remains below the central bank’s target, reinforcing expectations of a continued accommodative monetary policy.
“The BoJ’s forthcoming release of updated economic forecasts will be of paramount importance to investors and analysts. This release will position the BoJ as one of the first major central banks to provide a comprehensive reassessment of its projections in the wake of the recent US tariff announcements and the evolving global trade landscape. The market will be scrutinizing these forecasts for any indications of how the BoJ anticipates these developments will impact Japan’s economic growth and inflation outlook. Furthermore, Japan and the US are scheduled to resume trade talks on Wednesday, with discussions continuing throughout the week. This represents the second round of negotiations since the initial commencement of talks, and the outcomes of these discussions could have significant implications for the future of trade relations between the two countries and the broader regional economy.” The talks are expected to cover a range of issues, including market access, agricultural products, and intellectual property rights. Any breakthroughs or setbacks in these negotiations will likely trigger market volatility and influence the Yen’s trajectory.
