JPY continues to rise. Overview for 11.03.2024

The Japanese yen has strengthened against the US dollar, reaching its highest level of the month. The current USDJPY exchange rate stands at 146.98.

The main driver behind the yen's strength is the potential for the Bank of Japan to raise interest rates soon, given the positive trends in inflation and wages. Board Member Junko Nakagawa of the BoJ previously indicated signs of optimism in this regard.

The falling US dollar and Treasury bond yields also support the yen. This shift follows a change in the Fed's tone towards a dovish stance. The market expects the first interest rate cut in the current monetary cycle as early as June.

Domestic data reveals that Japan's GDP in Q4 2023 increased by 0.1% q/q and by 0.4% y/y. The statistics surpassed expectations, and compared to Q3 2023, the indicators showed significant improvement. In the third quarter of last year, GDP dropped by 0.8% q/q and by 3.3% y/y. The possibility of a technical recession appears to be averted.