Japan’s Economic Crisis
Japan’s Economic Crisis, Japan is no stranger to market volatility as the world’s third-largest economy,
the country’s recent statement that it will enhance its foreign currency reserves shows that it is taking precautions to insulate itself from any future economic crisis.
Topics
Traders and investors rejoice
The Pair: Flipped
The Fed’s Gradual Ascent
Traders and investors rejoice
This action may signify improved stability in Japanese markets for traders and investors.
And, given the country’s large cash reserves, there may be chances for individuals wishing to invest in a range of assets. Whether you want to invest in stocks, bonds, or real estate, Japan might be a good place to put your money.
This is hardly surprising considering Japan’s recent announcement of an imminent economic stimulus plan.
The package is estimated to be valued at JPY25.1 trillion ($170 billion USD).
This is a large sum of money, and it is apparent that the Japanese government is serious about fueling its economy.
Some worry that the stimulus will be too big and will lead to inflationary pressures in the future.
Shunichi Suzuki, Japan’s Finance Minister, has addressed these worries, saying that “we will always take action against excessive actions.” It’s encouraging to see that the Japanese government is aware of potential concerns and is taking precautions to prevent them.
The Pair: Flipped
The USD/JPY pair is struggling to find impetus today, bouncing in a narrow zone during the first half of trade. #
The pair is now trading slightly over the 148.00 level, and comfortably inside yesterday’s trading range.
Because there does not appear to be a clear trigger driving price movement at the present,
we may see more of this choppy consolidation in the short term.
The US dollar has been hovering at a three-week low, which has proven to be a significant headwind for the USD/JPY pair.
Softer US macro data reported on Tuesday indicated hints of a slowdown in the world’s largest economy,
perhaps forcing the Federal Reserve to adopt a more hawkish position.
This resulted in another drop in US Treasury bond rates, which continues to weigh on the greenback.
The Fed’s Gradual Ascent
The Fed is still projected to raise interest rates by 75 basis points in November and to continue tightening policy,
albeit at a slower pace. The Bank of Japan, on the other hand, is sticking to its ultra-easy monetary policy.
As a result, the path of least resistance for the USD/JPY pair is to the upside.
However, bulls are hesitant ahead of the Bank of Japan meeting on Thursday,
which might give some guidance for future rate rises.
The USD/JPY pair is vulnerable to range-bound market behaviour as it approaches important central bank event risk.
Market participants are hesitant to make strong bets, which might lead to the present range being extended.
The US New Home Sales data will be issued later in the morning North American session and may offer some momentum to the market. However, bond rates and overall market risk sentiment will have an impact on the key currency pair.