USD/JPY Forecast – ING Makes the Prediction That the Japanese Yen Will Weaken in the Short Term
The US dollar (USD) has been on a steady rise against the Japanese yen (JPY). While the price of living in the United States is still incredibly high, ING has made the
prediction that the yen will weaken in the short term.
The price of living in the US is on the rise, and it's getting harder to keep up. In addition to rising costs of goods and services, Americans are also dealing with higher interest rates, and the increased cost of borrowing. The Consumer Price Index (CPI) is a measurement of change in prices for a wide range of goods and services. It is used by the federal government to adjust taxes on income, as well as by the Labor Department to adjust union wages. However, the CPI is not a one-size-fits-all measure.
The CPI has been subject to a number of criticisms over the years. One example is the CPI's infamous 5% increase announced in May 2021. This rate hike has caused the prices of many consumer goods and services to rise, with the result that lower income families are now feeling the pinch.
As a result, more and more people are moving to a place where they can stretch their dollar farther. Some states, like Mississippi, have a much more affordable cost of living. Others, including California and Washington D.C., rank in the top ten for the cost of living.
In fact, some experts say that the cost of living in the U.S. is now worse than it was in the early 1980s. To make matters worse, a shortage of available housing has made it more difficult for more people to find an affordable home. Those who can't afford to purchase or rent a house are opting to live in apartments, which are becoming increasingly popular.
One of the cheapest and most environmentally friendly ways to survive the rising cost of living is to relocate. A survey of 16,000 US residents by the Council for Community & Economic Research found that the cost of living in the US is on the rise, with nearly a third of those surveyed saying they are struggling financially. While the price of living in the US is rising at a steady pace, it's not impossible to find a place where you can enjoy the American dream. However, you might have to look hard to find it.
USD/JPY is in a bullish trend
USD/JPY has been in a strong bullish trend for several months. This is a result of aggressive monetary policy by the Fed. It makes the US dollar more attractive as a financial investment.
The Fed is raising interest rates, which will strengthen the value of the U.S. dollar and the Japanese yen. In turn, the Japanese economy may be weakened. The Bank of Japan has maintained a dovish tone. Unlike the Fed, the BoJ has not made any changes to its monetary policy. At a recent policy meeting, it set a short term rate target of -0.25%.
The yen has been falling against the US dollar since early in the year, and has now reached its lowest level in over two decades. According to the Bank of Japan, the yen has been kept ultra-low to boost growth. However, that will likely not change unless the Bank of Japan makes a significant shift in its monetary policy.
As of late, the 10-year Treasury bond yield has been rising. This is due to higher inflation in the U.S., as well as slowing asset purchases by the US economy. Because the Fed is attempting to lower the inflation rate, it is raising interest rates. Traders have taken the opportunity to buy more U.S. dollars and sell more Japanese yen. This is known as a carry trade. Carry trades are considered negative to the economy of Japan, because it dilutes the value of the yen.
Short-term traders can take advantage of the carry trade by buying a higher[1]yielding currency and selling the yen. Long-term traders should be interested in the 10-year Treasury bond as well as 30-year Treasury bonds.
The current state of the economy and interest rates will have a direct impact on the direction of the USD/JPY. This pair has a high correlation to the stock market, as well as the bond market. With the Federal Reserve set to hike interest rates in December, the market will be looking to see if the Fed will take a less aggressive approach.
The FOMC policy meeting is scheduled for December 13-14. After the Fed's policy decision, the market will continue to watch the direction of the US dollar and the Japanese yen. Traders will also take a look at the usual Weekly Initial Jobless Claims data from the US.
USD/JPY has a positive correlation with USDCHF
The USD/JPY pair is one of the most traded currency pairs in the forex market. It is also the second most traded major currency pair, behind the EUR/USD. This pair effectively serves as a 24-hour currency market.
While most of the market moving news comes from the United States, the economic and political factors in Japan are also important. Traders who want to trade the USD/JPY will need to keep track of these key factors.
The Japanese yen is viewed as a safe haven, as it has low interest rates. Consequently, it is often traded in high volume. But it is important to recognize that monetary policies, such as the Bank of Japan's interventions, can affect its exchange rate.
In addition to interest rates, the Bank of Japan releases interest statements and key statistics. These reports are released periodically and have a significant impact on the yen's exchange rate.
Japan is an export driven economy. Consequently, when the yen devalues, exports increase. However, when a yen surge occurs, this can hurt the USD/JPY rate. Likewise, when the price of oil rises, the yen tends to fall. Although the US Dollar isn't directly tied to oil prices, it has a strong correlation with the price of crude oil. Another major factor that influences the USD/JPY rate is the Japanese Meteorological Agency. Severe earthquake warnings can have a huge impact on the yen's exchange value.
The Federal Statistical Office produces key data on the economy, the environment, and national importance. They publish these reports at least once a month. When there are new laws or administration statements, the value of the US Dollar increases. This makes the country's currency more attractive to investors. Likewise, when the government's fiscal policy, such as raising interest rates, drives demand for the dollar, the yen's value falls.
A positive correlation is indicated when the coefficient is +1. Conversely, a negative correlation is represented by a coefficient of -1. Some examples of currency pairs that have a positive correlation include EUR/CHF, AUD/CHF, and XAUUSD. Also, there is a strong positive correlation between the Canadian Dollar and the price of oil.
ING predicts the Japanese yen will weaken against the US dollar in the short term
In a recent report, ING suggests that the Japanese yen will weaken against the US dollar in the short term. This is an important issue because it reflects the country's finances. The depreciation of the yen makes everything in Japan more expensive. It also raises the financial burden on companies and households.
In recent years, the yen has plummeted to its lowest value against the US dollar in more than two decades. While a depreciation is not entirely positive for the economy, the underlying trend is positive, as the BoJ expects inflation to continue rising in line with its target of 2%.
As the Consumer Price Index reported in October, inflation rose to the highest level in almost 30 years. This led to hopes that the Fed would slow its aggressive interest rate hikes and bolster the US dollar. However, the Federal Reserve recently raised the main rate to 3.25%.
Despite this, the Bank of Japan has continued to keep its main rate below zero. Junko Nakagawa, a member of the BoJ policy board, acknowledged the government's economic measures, as well as a possible baseline scenario for economic activity. With the yen's depreciation, the value of Japanese exports has increased. But the decline in the purchasing power of Japanese consumers has been long-lasting. During the last year, the US dollar exchange rate has lost more than a fifth of its value against the Japanese yen. The yen has long been seen as a safe haven investment.
However, the yen's weakening against the US dollar has pushed Japan into a demographic time bomb. Over the past decade, the country has seen its population decline to the highest proportion in the world. Mass migration has led to severe labor shortages in most sectors.
ING predicts that the USD/JPY will reach 140 at the end of the year, which is a far cry from the 103 to 1 it had at the start of 2021. ING's forecast is based on the assumption that the US will perform better than other countries in 2022.
Ultimately, the yen's weakness is a result of the difference in interest rates between the US and Japan. That means the more expensive the yen becomes relative to the US dollar, the more difficult it will be for the Japanese to compete
Olga Steiner
https://financeworld.io/!!!Trading Signals And Hedge Fund Asset Management Expert!!! --- Olga is an expert in the financial market, the stock market, and she also advises businessmen on all financial issues.