The USD/JPY pair is strengthening on Monday after three idle sessions in a row; there is no any important news, as before.
At the beginning of the week, the Japanese Yen is slowly growing against the US Dollar. The current quote for the instrument is 111.35 as it is again moving close to the downside border of its mi-term trading range. Starting January 30th
, the Yen has strengthened against the US Dollar by 9.18% on average. This is too much, considering that the strong Yen does damage to exporters and decreases their profit.
Deutsche Bank report says that the Japanese Central Bank is going to expand its motivation program in the nearest future. Horizon of expectations is not more than three months. There is no point in decreasing the interest rate, which is already negative, but it’s there are resources to increase QE.
There is no consensus inside the monetary committee of the BoJ, but eventually the number of those who vote for an ultra-soft monetary policy is increasing. Within the last month, two more of the Central Bank members have joined the group of “soft” monetary politicians. That makes sense: the expansion of the program will contribute to more active cashflow inside the system, thus increasing chances for its recovery.
At the same time, the Japanese Central Bank will not be able, due to some financial and logical reasons, to keep the interest rate negative for a long time. The Bank needs to provide fertile ground if they want to return the rate to zero and maintain the positive effect of its negative value. Additional motivation may weigh in on here.
In theory, in respond to facts that the monetary conditions are becoming softer, the Yen must retreat.
RoboForex Analytical Department
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