Daily Digest Market Movers: Japanese Yen is weighed down by a combination of factors
- The Bank of Japan's (BoJ) cautious approach towards further policy tightening, along with softer wage data from Japan, dragged the Japanese Yen lower for the second straight day on Monday.
- The Bank of Japan struck a dovish tone at the end of the March monetary policy meeting and stopped short of offering any guidance about future steps, or the pace of policy normalization.
- The labor ministry reported that Japanese workers' inflation-adjusted real wages fell by 1.3% in February from a year earlier as compared to the previous month's revised decline of 1.1%.
- Data published by the Ministry of Finance showed Japan's current account rose to 2.64 trillion Yen in February, the highest since October last year, though was below consensus estimates.
- Reports that progress has been made in Gaza ceasefire talks boost investors' confidence and turn out to be another factor that undermines demand for the safe-haven JPY.
- Japanese government officials continued with their jawboning to defend the domestic currency, albeit doing little to impress the JPY bulls or hinder the USD/JPY pair's move up.
- The US Dollar draws support from the upbeat US jobs data released on Friday, which forced investors to trim their bets for a June interest rate cut by the Federal Reserve.
- The popularly known NFP report showed that the US economy added 303K jobs in March and the unemployment rate fell to 3.8% from 3.9% in the previous month.
- The data, meanwhile, gives the Fed more reason to stay patient and changed the odds of rate cuts this year from three to two, which pushes the US Treasury bond yields higher.
- The market focus now shifts to the release of the US consumer inflation figures for March, due on Wednesday, which will be followed by the FOMC meeting minutes.
- Investors will look for more cues on potential Fed rate cuts in 2024 before positioning for the next leg of a directional move for the buck and the USD/JPY pair.
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