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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / The Yen is retreating to its eight months lows. Overview for 25.11.2016
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The Yen is retreating to its eight months lows. Overview for 25.11.2016

The USD/JPY pair has been rising for three consecutive weeks and is getting closer to its eight months highs.

The Japanese Yen is falling against the USD. The current quote for the pair is 113.59; this is very close to eight months highs. The demand for the USD is eliminating all other drivers like before.

The statistics from Japan published this morning was mostly positive and could support the Yen unless long-term market risks. The Inflation Rate in October added 0.1% y/y, which is better than the previous reading of -0.5% y/y. The market didn’t expect the indicator to change. On a month-on-month basis, the indicator increased by 0.6%. The Core Inflation Rate in October lost 0.4% y/y after losing 0.5% y/y the month before, not significant improvement, but still improvement.

Everything, which is making the inflating move close to its target of 2%, is assessed absolutely positive. Any small increase in the CPI allows the Bank of Japan to continue its current monetary policy. The policy still raises more questions than gives answers, but one thing is for sure – it is effective.

In the long term, expectations of the USA Fed rate increase might count against the Yen, because it is likely to increase the difference between the rates of the USA and Japan, trigger cash outflow from Japanese bonds, and strengthen the demand for the USD. This driver will remain in effect for at least three more weeks, but later it is expected to get weaker.
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