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Three in a Row for Japanese CPI Growth and Trump Pantomime Continues

#News #CAD #JPY #MXN #NZD #USD
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Japan’s National Core CPI – an inflation reading that strips out volatile food prices – has risen on an annualized basis for the third consecutive month.

For the year ending March-17, core CPI grew 0.2%, matching February’s figure and improving on January’s 0.1%.

Although the rate of growth appears slight, it is a welcome development for central bankers in Japan, who have been battling deflation in the country for the best part of twenty-years. Prior to January, annualized core CPI had not been above zero since 2015.

This week, the Bank of Japan (BOJ) left monetary policy unchanged, although the Bank’s quarterly review appeared upbeat.

Within the review, several analysts highlighted the statement: “Japan’s economy has been turning toward a moderate expansion.” According to Reuters, prior to this week’s meeting the BOJ had not used the word “expansion” to describe the state of the economy since 2008.

The BOJ’s new inflation forecasts (revised down to 1.4% from 1.5% for the fiscal year 2017-18) are, however, still considered to be wishful thinking by many in the market. The BOJ are still “too optimistic” on inflation, said Marcel Thieliant, a senior economist at Capital Economics, this week.

In other data released today, Japanese unemployment was shown to have held steady in the month of March at 2.8%. Like CPI, the data matched February’s release. Forecasts had been for a slight increase to 2.9%.



AUD/JPY 3 Month Chart

As of writing at 02:55 GMT, the Japanese yen has responded minimally to this morning’s data. Although slightly stronger, the yen is virtually unchanged on the day versus the US, Australian and New Zealand dollar currencies.

Exchange rates for USD/JPY, AUD/JPY and NZD/JPY are at 111.13, 82.96 and 76.42 respectively.

 

Trump Flip-Flops Again

Having flip-flopped on everything from NATO (it’s “no longer obsolete”) to China as a currency manipulator, to his stance on Janet Yellen as the Federal Reserve Chair, to the US military’s use of waterboarding, as well as his own federal hiring freeze implemented in January (now dropped), and let’s not forget, his promise to pursue means of having arch enemy Hilary Clinton locked up, the Trump administration’s ability to confuse and bewilder appears to have no limits.

Again on Thursday, what appears to be more Trump administration flip-flopping caused markets to do a sharp reversal on their previous course.

Yesterday on BestExchangeRates.com, we described how the Mexican peso had been hammered on a report (an apparent White House leak to journalists) that the Trump administration was preparing to pull the US out of NAFTA – the free trade agreement between Canada, the US and Mexico in place since 1994. The Canadian dollar had also lost value against the US dollar on the news, but to a lesser extent than the peso.

While a withdrawal from NAFTA would have disheartened many in business, it would not have been too surprising to those following Trump’s presidential campaign. While campaigning, Trump described NAFTA as a “job-killing disaster” for America. However, it’s apparently not disastrous enough, because the US aren’t pulling out after all, or so it seems.

Less than twenty-four hours following the NAFTA-withdrawal news, Trump appears to have called it off. Apparently, now the US President will seek to renegotiate and revamp the NAFTA agreement, rather than pull out.

Around 3am in London yesterday, or noon in Sydney, the Mexican peso and Canadian dollar jumped on the news of Trump’s reversal. Within two-hours the peso had made back almost all of its losses from the previous day and the Canadian dollar had done the same, with interest (Canadian dollar strength actually pushed USD/CAD below support, marking two-day highs in CAD strength).

As of writing, the US dollar has rallied again. The exchange rates for USD/MXN and USD/CAD stand at 19.00 and 1.3639 respectively.

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Further Reading

 

Coronavirus spread fears linger – USD strong – AUD at 11 year lows

This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.

Last update: 22 Feb, 2020

Coronavirus unnerves currency markets

The strong start to the year for “risk-on” currencies is already a distant memory.

Posted: 3 Feb, 2020

New Year Optimism Retreats on US/Iran Tension

The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.

Last update: 8 Jan, 2020

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

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