USD/JPY continues to trade sideways and looks like it may drift right into the weekend. In the European session, USD/JPY is trading just above the 124 line.
Japanese data mixed
Japan released a data dump on Friday, but the yen wasn’t biting and has shown little change. Consumer Confidence slowed for a third straight month in March, dropping from 35.2 to 32.8. To a large extent,
the decline can be attributed to strict Covid restrictions, which were in place for most of March and weighed on consumers’ moods. The outlook is a bleak one for consumers, as real incomes have stagnated due to Covid curbs and higher prices. This has led consumers to cut down on spending, which is bad news for the economy.
There was better news from Japan’s Current Account, which jumped in February to JPY 0.52 trillion, up from JPY 0.18 trillion a month earlier. Japanese exports are booming, with timely assistance from the weak Japanese yen, which flirted with the 125 line last week. However, this data precedes the Ukraine war, which has triggered soaring commodity prices and made imports into Japan more expensive. This will likely have a negative impact on the next Current Account release.
BoJ Governor Kuroda has said that he supports a weak yen, but apparently not “too weak a yen”. The central bank intervened last week after the yen fell sharply, with Kuroda expressing concerns about rapid moves in the exchange rate. The yen subsequently recovered but has once again resumed its downward movement. I expect USD/JPY to retest 125 shortly, but when that happens, traders should be prepared for Kuroda to again make statements designed to curb the yen’s decline. US Treasury yields continue to move higher, and the widening US/Japan rate differential will continue to weigh on the yen.
USD/JPY Technical
USD/JPY has support at 121.25 and 119.16
123.25 is under pressure resistance. Above there is resistance at 124.67
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assistance from the weak Japanese yen, which flirted with the 125 line last week. However, this data precedes the Ukraine war, which has triggered soaring commodity prices and made imports into Japan more expensive. This will likely have a negative impact on the next Current Account release.
which were in place for most of March and weighed on consumers’ moods. The outlook is a bleak one for consumers, as real incomes have stagnated due to Covid curbs and higher prices. This has led consumers to cut down on spending
Conflict Forex trading Will Accelerate Adoption of BITC.
Bitcoin rose slightly, by 0.6%, to $43.6K. Ethereum added 1.6%, while other leading altcoins from the top 10 showed mixed dynamics: a 3% decline (Terra) to 6.2% growth (Solana).
Total crypto market capitalisation, according to CoinMarketCap, rose 1.2% to $2.02 trillion overnight. Bitcoin’s dominance index declined 0.4% to 40.9%.
The cryptocurrency Fear and Greed Index was up 3 points to 37 by Friday but did not come out of the “fear” state
.
Bitcoin briefly dipped below $43K on Thursday but, by the end of the day, had offset most of the decline, remaining near Thursday’s closing levels amid a rebound in US stock indices.
According to Bloomberg, a renewed slide in stock indices could hit bitcoin hard. Short-term risks are rising as the US Federal Reserve intensifies its fight against inflation and rising interest rates and intends to embark on aggressive balance sheet cuts.
In contrast, Galaxy Digital CEO Michael Novogratz believes bitcoin is gradually losing its correlation with stock indices. He believes lower inflation and a stabilising economy will push bitcoin up.
Meta is exploring the possibility of creating a cryptocurrency for the meta-universe to boost revenues due to the decline in popularity of their cash cow apps, Facebook and Instagram.
Russian Prime Minister Mikhail Mishustin said that 10 million Russians have over 10 trillion roubles ($128 billion) in crypto wallets, which is just under $1,000 per Russian resident. He also called for regulation of cryptocurrencies, although he rejected their recognition as a means of payment.
The Economist Intelligence Unit believes that the war will accelerate Ukraine’s cryptocurrency adoption. From examples in Africa, the Middle East, and Latin America, we have previously seen that the use of cryptocurrencies increases dramatically when national economies and local currencies weaken.
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run production capacity limits and surging input costs are larger concerns for businesses than any weakness in demand. The central bank will likely take some comfort from the fact that businesses expect inflation to return to the 2% target after the next couple of years. But current price growth is still running too firm to ignore, with pressures building over a widening array of products and services. Easing off the monetary policy accelerator—and getting interest rates back to a more ‘neutral’ level that won’t add to or subtract from longer-run inflation pressures—is a the most likely path near-term.
We expect more rate hikes from the Bank of Canada to lift the overnight rate to 2.00% (up from 0.5% currently) before the end of this year. The bank will likely pause at that point to assess what we expect to be a slowing economic growth backdrop. The U.S. Federal Reserve is expected to be more aggressive, continuing to hike into 2023, as it grapples with more significant production capacity pressures and firmer inflation readings. March U.S. CPI data next week will reinforce those inflation concerns with the headline rate likely to increase to the 8.3% range, driven by skyrocketing gasoline prices following the Russian invasion of Ukraine. But gas isn’t the only thing to see faster year over year price growth. And pressures are broadening as strong consumer demand bumps up against production capacity limits and extremely tight labour markets