Daily Digest Market Movers: Japanese Yen extends the range play amid mixed fundamental cues
- Fears that Japanese authorities will intervene in the markets to stem any further weakness in the domestic currency and a softer risk tone lend some support to the safe-haven Japanese Yen.
- Japan's Finance Minister Shunichi Suzuki reiterated on Tuesday that the government is watching FX moves with a high sense of urgency and that the exchange rate was set by a number of factors.
- Adding to this, Japan's Finance Ministry official Atsushi Mimura said that the government can sell assets such as savings and foreign bonds in FX reserves when it is necessary to intervene.
- Mimura added that Japan is always communicating and coordinating with other countries in case of FX intervention and is mindful of maintaining safety and securing liquidity in FX reserves management.
- Data released this Wednesday showed that Japanese exports grew more than expected in January, though a bigger-than-estimated fall in imports pointed to sluggish domestic demand and a weak economy.
- Exports grew 11.9% year-on-year in January, or the highest since November 2022, as compared to a 9.5% fall anticipated, while imports shrank 9.6%, resulting in a lower-than-forecast deficit of ¥1.758 trillion.
- According to the Reuters Tankan poll, Japanese manufacturers’ business confidence fell in February, from the previous month’s reading of 6 to -1, marking the first negative reading since last April.
- This comes on top of a technical recession in Japan, which could derail the Bank of Japan's plan to exit its ultra-easy policy this year and is holding back the JPY bulls from placing aggressive bets.
- The US Dollar struggles near its lowest level in over two weeks amid bets that the Federal Reserve will start cutting interest rates in the coming months and caps the upside for the USD/JPY pair.
- Traders now look to the release of the FOMC meeting minutes for cues about the Fed's rate-cut path, which will drive the USD demand and provide some meaningful impetus to the currency pair.
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