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US Dollar to Japanese Yen Exchange Rate Plunges on Trump Uncertainty
Published: 19 May at 1 PM Tags: Dollar Exchange Rate, Currency Exchange, Forex, Yen Exchange Rate, UK, Exchange Rates, Inflation,
The US Dollar to Japanese Yen exchange rate has seen its worst drop since March this week. Scandals surrounding US President Donald Trump have weakened the ‘Greenback’ and left ‘safe haven’ currencies like the Yen more appealing.
USD/JPY began the week trading at around 113.33. The pair then plummeted in the middle of the week and on Thursday hit a May low of 110.29. The pair looked on track to lose around two yen throughout the week.
US Dollar (USD) Undermined by Political Uncertainties
Despite relatively solid US economic data being published, market focus has been on US President Donald Trump throughout this week. This has left the US Dollar weaker against most majors, especially ones currently perceived as safer buys.
Concerns about Trump finding enough support to pass legislation on anticipated tax and infrastructure plans have been exacerbated this week due to a number of scandals that have risen about the controversial President.
The concerns mostly revolve around reports that Trump had asked ex-FBI Director James Comey (whom Trump fired last week) to drop an investigation into Michael Flynn’s communications with Russian officials.
Some critics have said this amounted to obstruction of justice, which is an impeachable offense. Although impeachment is seen as highly unlikely with Republicans in control of Congress, the mention of the word was enough to throw US markets into a panic.
Comey, who was previously heading up the Trump-Russia investigation, has been replaced by Robert Mueller who will now head the case as a special prosecutor. Mueller was the FBI boss before Comey.
The rising pile of concerns for Trump and his administration has increased market concerns that at the very least, Trump will have more difficulty passing through anticipated tax or infrastructure plans.
Japanese Yen (JPY) Benefits from ‘Safe Haven’ Demand, JP Growth Stats
All of the past week’s Trump news has made US markets anxious, significantly boosting the appeal of traditional ‘safe haven’ currencies. The Japanese Yen is seen as one of the most reliable safe havens for forex investors.
Analysts expect the Japanese Yen will continue to benefit from any Trump jitters or uncertainties over the coming weeks and months too, as news continues to come out of Trump-Russia investigations.
The Japanese Yen has also benefitted from Japanese data this week. Thursday saw the publication of Japan’s preliminary Q1 Gross Domestic Product (GDP) results, which beat expectations.
Quarter-on-quarter growth was predicted to rise from 0.3% to 0.4%, but is now projected to come in at 0.5%. Yearly growth is now projected to improve from 1.4% to 2.2%, beating the previous estimation of an improvement from 1.2% to 1.7%.
USD/JPY Forecast: Political Concerns Remain in Focus
The relationship between the US Dollar and Japanese Yen remains to be one that heavily revolves around perceived risk in markets. In times of US economic or political uncertainty, USD/JPY falls. In times of confidence, USD/JPY rises.
As the recent Trump news has been influential enough to cause a drop in Federal Reserve interest rate hike bets for June, it has largely overshadowed data in its USD/JPY influence.
As a result, USD/JPY is likely to recover if investors become cooler on Trump jitters, especially if Trump is able to regain support from members of Congress.
However, the ongoing nature of the Trump-Russia investigation could leave USD/JPY pressured for some time.
The coming week’s data is still likely to be of some influence to the pair, especially next Friday’s US Gross Domestic Product (GDP) projections for Q1.
Next week’s Japanese inflation stats will be influential for Japanese Yen trade. If inflation continues to edge away from deflation, market confidence in Japan’s economic recovery will strengthen.
USD/JPY began the week trading at around 113.33. The pair then plummeted in the middle of the week and on Thursday hit a May low of 110.29. The pair looked on track to lose around two yen throughout the week.
US Dollar (USD) Undermined by Political Uncertainties
Despite relatively solid US economic data being published, market focus has been on US President Donald Trump throughout this week. This has left the US Dollar weaker against most majors, especially ones currently perceived as safer buys.
Concerns about Trump finding enough support to pass legislation on anticipated tax and infrastructure plans have been exacerbated this week due to a number of scandals that have risen about the controversial President.
The concerns mostly revolve around reports that Trump had asked ex-FBI Director James Comey (whom Trump fired last week) to drop an investigation into Michael Flynn’s communications with Russian officials.
Some critics have said this amounted to obstruction of justice, which is an impeachable offense. Although impeachment is seen as highly unlikely with Republicans in control of Congress, the mention of the word was enough to throw US markets into a panic.
Comey, who was previously heading up the Trump-Russia investigation, has been replaced by Robert Mueller who will now head the case as a special prosecutor. Mueller was the FBI boss before Comey.
The rising pile of concerns for Trump and his administration has increased market concerns that at the very least, Trump will have more difficulty passing through anticipated tax or infrastructure plans.
Japanese Yen (JPY) Benefits from ‘Safe Haven’ Demand, JP Growth Stats
All of the past week’s Trump news has made US markets anxious, significantly boosting the appeal of traditional ‘safe haven’ currencies. The Japanese Yen is seen as one of the most reliable safe havens for forex investors.
Analysts expect the Japanese Yen will continue to benefit from any Trump jitters or uncertainties over the coming weeks and months too, as news continues to come out of Trump-Russia investigations.
The Japanese Yen has also benefitted from Japanese data this week. Thursday saw the publication of Japan’s preliminary Q1 Gross Domestic Product (GDP) results, which beat expectations.
Quarter-on-quarter growth was predicted to rise from 0.3% to 0.4%, but is now projected to come in at 0.5%. Yearly growth is now projected to improve from 1.4% to 2.2%, beating the previous estimation of an improvement from 1.2% to 1.7%.
USD/JPY Forecast: Political Concerns Remain in Focus
The relationship between the US Dollar and Japanese Yen remains to be one that heavily revolves around perceived risk in markets. In times of US economic or political uncertainty, USD/JPY falls. In times of confidence, USD/JPY rises.
As the recent Trump news has been influential enough to cause a drop in Federal Reserve interest rate hike bets for June, it has largely overshadowed data in its USD/JPY influence.
As a result, USD/JPY is likely to recover if investors become cooler on Trump jitters, especially if Trump is able to regain support from members of Congress.
However, the ongoing nature of the Trump-Russia investigation could leave USD/JPY pressured for some time.
The coming week’s data is still likely to be of some influence to the pair, especially next Friday’s US Gross Domestic Product (GDP) projections for Q1.
Next week’s Japanese inflation stats will be influential for Japanese Yen trade. If inflation continues to edge away from deflation, market confidence in Japan’s economic recovery will strengthen.
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Source: moneytransfer.co.uk