The Japanese Yen (JPY) experienced a significant increase against the US dollar today, hitting the 160 mark early in the day and achieving its highest point since October 1986. After peaking at 160, the JPY retreated to the 155 level compared to the US dollar. This sudden change in the currency market came after the Bank of Japan (BOJ) decided to keep interest rates unchanged, going against the general market predictions.
The JPY's rapid rise, coupled with reports of Japanese banks actively selling the US dollar, is seen as a possible intervention by the Japanese government. According to the latest monetary policy statement by the BOJ, they have reaffirmed their dedication to bond purchases to support strong economic growth, while also increasing their inflation forecasts. Traders had anticipated Japanese officials' intervention due to the JPY hitting a 34-year low and decreasing over 10% against the US dollar this year.
Citing Reuters, Japan's top foreign exchange diplomat, Masato Kanda, refrained from commenting on market speculations regarding Japan's involvement in the forex market. Meanwhile, global capital market expert, The Kobeissi Letter, highlighted the significance of a 2.5% fluctuation in one of the major world currencies within minutes, underlining its potential impact on the global market outlook. The timing of this occurrence right after the BOJ's decision to maintain steady interest rates further elevated its importance.
The weakening of the US dollar elicited a positive reaction in the stock markets, with the US Dollar Index (DXY) dropping to 105.46 and US Treasury yields decreasing. Futures for prominent US stock indices such as Dow Jones, S&P 500, and Nasdaq indicated signs of improvement. Asian markets followed suit as investors mostly overlooked the latest inflation report, focusing instead on the upcoming Federal Reserve (Fed) monetary policy decision on May 1st.
DXY's Fall Sparks Optimism Among Crypto Investors
The cryptocurrency market welcomed the DXY's decline, potentially boosting positive sentiment for a market rebound. Specifically, the US Treasury Department's declaration this week of providing up to 1.4 trillion dollars in liquidity for the second quarter of 2024 was well received by those holding high-risk assets. Nevertheless, the cryptocurrency market remains unstable with news of liquidations ahead of the Fed's monetary policy decision, and continual liquidations of long positions are impeding market recovery.
As per Coinglass, Bitcoin (BTC) and Ethereum (ETH) experienced significant liquidations in long positions amidst conflicting signals from derivative markets. Recent data indicates BTC trading at 62,241 dollars, while ETH stands at 3,180 dollars.
Comments