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As fears of a US economic slowdown mount, the USD/JPY exchange rate attempts to push auctions below 132.00

Alina Haynes

Jan 09, 2023 14:46

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During the opening minutes of the Asian session, the USD/JPY pair breached the immediate support level of 132.0. Given the severe volatility of the US Dollar Index, it is anticipated that the major will modify its auction profile below 132.00. (DXY). As Japanese markets are closed on Monday in observance of Coming of Age Day, the USD/JPY exchange rate may decline.

 

As the S&P500 futures have prolonged their upward gallop in early Monday trade, the market players' appetite for risk has increased. In addition, the US Dollar Index (DXY) is feeling more offers after President Evans' speech at the Chicago Federal Reserve that was less forceful (Fed). The USD Index has extended its decline to approximately 103.35 and is projected to reach a six-month low of 103.00.

 

Evans, president of the Chicago Fed, was quoted in the Wall Street Journal (WSJ) as saying, "It was likely that economic data would justify a 25 basis point raise in the policy rate at the Fed's next meeting," according to a Reuters story.

 

Friday, Atlanta Fed bank president Raphael Bostic told Reuters that the Federal Reserve's actions will depend on the status of the economy. In addition, he noted that "The US economy is certainly faltering" due to a significant decrease in housing and interest rate activities. In terms of policy rate forecasts, the Fed policymaker anticipates a terminal rate above 5% and the continuation of policy rate peaks until CY2024.

 

As reported by Reuters, Japanese Prime Minister Fumio Kishida indicated on Sunday that his administration and the Bank of Japan (BoJ) must reevaluate their relationship in guiding economic policy after a new BoJ governor is appointed in April. In a move that would open the stage for an exit from the Bank of Japan's ultra-loose monetary policy, he stated that the government may reconsider its decade-long commitment to combat deflation with the Bank of Japan.


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