REASONS WHY
Interest Rate Differential: The interest rate set by the central bank is a major factor that affects the value of a currency. If the Bank of Japan (BoJ) raises its interest rates or signals an intention to do so, while the Federal Reserve maintains or cuts its rates, the JPY could strengthen against the USD.
Currently, the market sentiment is that the BoJ will end its ultra-loose policy stance in April by raising interest rates from negative 0.1% to 0.1%2.
Economic Indicators: Economic indicators such as GDP growth, unemployment rate, inflation, and retail sales can influence the value of a currency. If these indicators show a stronger economy in Japan compared to the US, the JPY could appreciate against the USD3.
Market Sentiment: Market sentiment can also play a role. If traders anticipate a downturn in the
US economy or a rise in the Japanese economy, they might sell USD and buy JPY, leading to a short position on USD/JPY.
Geopolitical Events: Geopolitical events and uncertainties can cause investors to move towards safe-haven currencies like the JPY. If there’s increased geopolitical tension or economic uncertainty, the JPY could strengthen against the USD.
Trade Balance: Japan is a major exporter, and a positive trade balance could lead to an appreciation of the JPY. If Japan’s export growth outpaces its imports, creating a trade surplus, the JPY could strengthen against the USD
Interest Rate Differential: The interest rate set by the central bank is a major factor that affects the value of a currency. If the Bank of Japan (BoJ) raises its interest rates or signals an intention to do so, while the Federal Reserve maintains or cuts its rates, the JPY could strengthen against the USD.
Currently, the market sentiment is that the BoJ will end its ultra-loose policy stance in April by raising interest rates from negative 0.1% to 0.1%2.
Economic Indicators: Economic indicators such as GDP growth, unemployment rate, inflation, and retail sales can influence the value of a currency. If these indicators show a stronger economy in Japan compared to the US, the JPY could appreciate against the USD3.
Market Sentiment: Market sentiment can also play a role. If traders anticipate a downturn in the
US economy or a rise in the Japanese economy, they might sell USD and buy JPY, leading to a short position on USD/JPY.
Geopolitical Events: Geopolitical events and uncertainties can cause investors to move towards safe-haven currencies like the JPY. If there’s increased geopolitical tension or economic uncertainty, the JPY could strengthen against the USD.
Trade Balance: Japan is a major exporter, and a positive trade balance could lead to an appreciation of the JPY. If Japan’s export growth outpaces its imports, creating a trade surplus, the JPY could strengthen against the USD