- The Japanese Yen (JPY) is falling for a second day
- BoJ expected to hold on rate hikes in April
- The US Dollar (USD) is rising against major peers
- Trump extends the Iran ceasefire indefinitely
The US dollar Japanese yen (USD/JPY) exchange rate is rising for a second day. The pair rose 0.35% in the previous session, settling on Tuesday at 159.38. On Wednesday at 16:30 UTC, USD/JPY trades +0.05% at 159.43 and traded in a range of 159.11 to 159.40.
The Japanese yen is under pressure as oil prices rise above $100 and amid growing expectations that the Bank of Japan will leave monetary policy unchanged at its meeting next week.
Sources familiar with the central bank told Reuters that policymakers are inclined to wait for more data to assess the economic impact of the Middle East conflict before making any decisions on interest rates.
Japan’s economy is particularly vulnerable to rising energy prices due to its heavy reliance on imported energy, especially from the Middle East region. The energy shock is expected to have an inflationary impact.
The U.S. dollar is rising across the board. The U.S. Dollar Index, which measures the currency against a basket of major peers, is rising 0.14% to 98.53, gaining for a second day.
Furthermore, Iran is yet to agree to the ongoing ceasefire and has said it is because the US continues to blockade its ports. The Strait of Hormuz will remain closed, keeping oil prices elevated.
While the stock market is brushing off high oil prices, with US stocks rising back towards fresh records, the FX market is more cautious.
The USD is also finding support following Federal Reserve Chairman Kevin Warsh’s hearing before the Senate Banking Committee, which was considered to be slightly more hawkish.
There is no US economic data due to be released today. Yesterday, US retail sales came in stronger than expected, jumping 1.7% month-on-month, driven by higher fuel prices and household spending of tax refund checks.
