The Japanese yen continues to rally this week. In Thursday’s North American session, USD/JPY is trading at 108.70, down 0.48% on the day. On the release front, unemployment claims climbed to 233 thousand, but managed to beat the estimate of 236 thousand. New Home Sales slowed to 625 thousand, well off the estimate of 679 thousand. Later in the day, Japan releases Tokyo Core CPI and the BoJ Minutes, so we could see some movement from the yen. On Friday, there are two key releases in the US – Advance GDP for the fourth quarter and durable goods reports.
The streaking yen continues to make headway against the US dollar. The Japanese currency has gained 1.9% this week, and the dollar has dropped below the 109 level for the first time since September 2017. The greenback is under sustained pressure from its major rivals. On Wednesday, US Treasury Secretary Steven Mnuchin didn’t do the dollar any favors by stating that “obviously a weaker dollar is good for us as it relates to trade and opportunities”. The yen received a further boost this week when negative sentiment over global equity markets increased demand for safe haven assets.
There were no surprises from the Bank of Japan, which released a monetary policy statement earlier in the week. As expected, the BoJ held interest rates in negative territory, at -0.10%. The monetary policy statement noted that policymakers expect the economy to continue to show modest expansion, and that the BoJ would maintain current qualitative and quantitative monetary easing until consumer inflation hits the 2 percent target. Recently, there has been talk of the BoJ tightening its policy, given the rebound in the economy. However, BoJ Governor Kuroda has taken pains to reiterate that the Bank will not be changing its ultra-accommodative monetary policy anytime soon. In a quarterly review, the BoJ made no changes to its economic and inflation projections, and reiterated its forecast that inflation will reach the 2 percent target in the 2019-2020 fiscal year.
