The USD/JPY pair moved upwards on Tuesday morning, thus stopping the bearish rally.
The Japanese Yen stopped rising steadily against the USD on Tuesday and formed a correction. The current quote for the instrument is 110.88.
In the morning, Japan published couple of reports, which influenced the Yen’s behavior. The first one, the Producer Price Index, added only 3.1% y/y in December, which is worse than expected (+3.3% y/y) and much worse than the November reading (+3.6% y/y).
The second report, the Tertiary Industry Index, didn’t save the day. In November, the indicator expanded by 1.1% m/m, although it was expected to add only 0.4% m/m.
Last week, the Bank of Japan decided to limit buying 10-y and 25-y bonds and this decision was immediately taken by investors as a signal of closing the QE program sooner than it was planned before. Well, such speculations have reasons, because the QE program has been in effect for many months and seems to be very efficient, however, one should understand that without the QE program the Japanese inflation will never reach a stable reading of 1.8% - 2% a year.
Right now, the USD/JPY pair is trading near the lows it reached in September 2017 and it’s not a good piece of news for the Japanese budget and exporters.
RoboForex Analytical Department