Japanese Yen posted modest gains on Friday during the Asian trading session after the consumer price index signalled accelerated inflation in Japan.US Dollar index, showing the price of the Dollar relative to the trade-weighted basket of six leading currencies, rose 0.23% to 89.87.
US Treasury Secretary Stephen Mnuchin stated on Thursday that spending plans of President Donald Trump would lead to a rise in wages, but would not cause an increase in inflation on a large scale. “You can have wage inflation without having inflation problems in general,” said Mnuchin, easing investors’ anxiety about inflation and interest rates. Officials of the Federal Reserve also warned that further increases in rates would bar economic growth.
USD/JPY strengthened by 0.22% to 106.99, after it became known national consumer price index in Japan rose by 0.9% year on year beating a median projection of 0.8%. Inflation is still growing slowly and keeps far from the goal of the Bank of Japan at 2%. Speculators who recently bet on the Yen grow are now receive support from economic front, what makes a medium-term bullish case on Yen even more attractive for investors.
Economists also forecast that the central bank of Japan will adhere this year to the long-term goal of the yield of government bonds of 0%. This goal is an important part of the ultra-loosened monetary policy that the bank conducts under the leadership of Haruhiko Kuroda, whose term was recently prolonged.
AUD/USD meanwhile fell by 0.33% to 0.7819. One of the leading Australian investment management specialists said that the Australian dollar will continue to fall in price, as the Reserve Bank of Australia keeps interest rates low, while the FED is going to tighten policies this year quicker, widening the rate differential, what contributes to capital outflow to the US. Rate hiking race with other developed economies as well as trade friction fears will dominate in Dollars sentiments in the near term.