USD/JPY Rises As BoJ Signals Tightening to Enable Price Stability

The Japanese yen is extending its 2021 weakness on Tuesday as lackluster economic data weighed on the conventional safe-haven asset. The yen has been struggling this year, with investors struggling to maintain confidence in the country’s economic recovery and concerns over the nation’s increasing number of COVID-19 cases. Where is the yen heading?

According to the Ministry of Economy Trade & Industry (METI), retail sales fell by 1.5% year-over-year in February, up from a 2.4% slide in January. The market had anticipated a decline of 2.8%. Retail trade contracted for general merchandise, apparel, food, fuel, and medicine and toiletry.
On a monthly basis, retail sales rose 3.1%, the biggest climb since June of last year.
On the labor front, the unemployment rate was unchanged at 2.9% last month, while the jobs to applications ratio dipped to 1.09 in February.
The central bank was in focus this week after Bank of Japan (BoJ) Governor Haruhiko Kuroda provided financial markets with a cautiously optimistic view of the national economy. Kuroda stated that Japanese growth is picking up from the economic catastrophe that emanated from the coronavirus pandemic, alluding to the success of the country’s aggressive stimulus efforts.
Kuroda believes that growth will be “clearly positive” in the new fiscal year that starts in April, attributing it to global and domestic demand for durable goods.

The global economy is rebounding, a move that is also seen in Japan’s economy. The recovery in the US economy is positive both for Japan and global growth.

We will closely monitor markets as well as overseas and domestic economic developments, as various uncertainties remain on the impact of the COVID-19 pandemic.

Meanwhile, the central bank chief stated that the monetary policy mandate must concentrate on price stability, hinting that the institution could curtail its stimulus to avoid the potential ramifications for banks.
Financial analysts will receive official projections from the BoJ and where it stands on economic growth and inflation forecasts at the April 26 and April 27 review of interest rates.
Japan has been witnessing an increase in new coronavirus infections, with the seven-day average nearly doubling to 1,800 this month. In total, the world’s third-largest economy has reported 470,000 cases and a death toll of more than 9,000.
The Japanese bond market was mixed, with the ten-year yield rising 0.017% to 0.84%. The three-month bill dipped 0.013% to -0.104%, while the 30-year bond edged up 0.002% to 0.641%.
The USD/JPY currency pair advanced 0.47% to 110.33, from an opening of 109.81, at 14:44 GMT on Tuesday. The EUR/JPY climbed 0.15% to 129.39, from an opening of 129.19.
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Original from: www.earnforex.com