USDJPY has broken the Ascending triangle pattern in Upside.
Where Is USDJPY Today
USDJPY has been one of the currency pairs that has been the most impacted by the current economic crisis around the globe. Although previously been reaching new heights, this past week it has mainly struggled to stay above support levels. However, it seems like it finally broke off from this curse and is again in bullish markets.
USDJPY is moving in the Box Pattern and Market has rebounded from the Horizontal Support area of the Pattern.
This is mainly due to the recent speech by President Biden where he extends his support to Feds Chairman Powell. This caused the USDJPY to finally begin an uptrend and it has since been teasing around the 129.5 region.
BOJ Masazumi Speech
Early on Wednesday, the deputy governor of the Bank of Japan, Masazumi Wakatabe held a speech at a meeting with the local leaders in Okayama where he discussed Japan’s Economy and Monetary Policy. He reveals, “In Japan, there is a persistent belief that the two oil shocks were the cause of the Great Inflation. While it is true that inflation accelerated partly due to the oil shocks, the consensus among academics is that the main cause of the Great Inflation was actually excessive monetary easing.
USDJPY is moving in an Ascending channel and Market has reached the higher high area of the channel.
In Japan, the main reason for the acceleration in inflation was the 25-30 percent annualized increase in the money supply from the end of 1970 through 1973, before the first oil shock occurred in October 1973. In fact, inflation rates during the Great Inflation for both the United States and Japan show that prices of items other than energy, including services, had increased considerably, indicating that the main cause of inflation was not a rise in energy prices.”
He further adds, “Low inflation is currently coexisting with price increases in some items. Since this low inflation is connected to low wage inflation, it is necessary for the Bank to continue with monetary easing to stimulate the economy and thereby realize a virtuous economic cycle where an increase in income leads to that in spending. In addition, it is extremely important to determine the sustainability and stability of inflation. Although the rate of change in the CPI reached 2 percent in April, if this lasts only about six months to a year, the price stability target of 2 percent cannot be said to have been achieved in a sustainable and stable manner. It is necessary to carefully assess underlying inflation by examining various price measures, including the price change distribution, the trimmed mean, and the mode, while paying close attention to factors affecting underlying inflation; namely, developments in the output gap, wage inflation, and medium- to long-term inflation expectations.”
President Biden Speech
These days there is a ton of pressure on the Feds to bring inflation under control. The chairman of the Feds, Jerome Powell has been assuring the public that they have no choice but to consistently bring the interest rates to a new high every session. This is the only way that they see the economy will get over the inflation. Unlike the previous president Donald Trump who would constantly threaten Powell to bring down interest rates or else he’ll get fired, President Biden brings forward a different approach. Biden has come out publicly stating that Powell has his full support in whatever he plans to do in order to bring the economy back on track. This show of support was much needed for Powell as he was beginning to lose the support of the people as they weren’t seeing any progress with the inflation in the economy. Although normally it’s not seen to be a good thing to mix politics and financials, Biden believed this was the right opportunity to do so in order to prevent any financial and political instability in the economy.
Jeff Mason who is an analyst with Reuters has been following this story and reveals, “The U.S. economy had its strongest growth in nearly four decades in 2021 after the government poured trillions of dollars in COVID-19 relief into the economy, and the Fed kept borrowing costs near zero. The rescue efforts helped drive unemployment down to 3.6% from its pandemic-era high of 15%, but also revved up consumer spending has contributed to higher prices. A Labor Department report earlier this month showed unemployment rolls shrinking to the lowest level in 52 years, helping to drive wage growth. The Fed hopes inflation will moderate on its own, as companies sort out supply chain issues complicated by the pandemic, for example, and consumers shift spending toward services. But Powell has also made clear that the Fed is no longer counting on that, and will ratchet interest rates as high as needed.”
PM Kishida Visit To Singapore
Around mid-June, we’re expecting quite a few different world leaders to show up in Singapore for the Shangri-La Security Forum. Among the seven leaders who are expected to show up, Japan’s Prime Minister Kishida will be the only Asian to make the panel. Kishida hopes that this forum will bring a great opportunity for Japan to, once again, extend its support to the people of Ukraine in these times of need. Japan has previously been accused of either supporting Russia or playing both sides. They have since tried to prove their loyalty to the people of Ukraine by mentioning their support to this war-struck country whenever they get a chance to speak at a high-profile meeting with other top-class world leaders.
During a parliamentary session, Kishida reveals, “As the only Asian nation among the Group of Seven, I will tell (the audience) the kind of role Japan will play going forward at a time when the diplomatic and security environment is becoming increasingly severe.” Chief Cabinet Secretary Hirokazu Matsuno also reveals, “The prime minister will explain efforts to realize a ‘free and open Indo-Pacific’ and our foreign and security policy.” Analysts at Nikkei Asia also reveal, “Japan has strongly condemned Russia’s invasion of Ukraine, seeing it as an example of the use of force to change the status quo in clear violation of international law. It has coordinated with other G-7 nations in imposing sanctions to isolate Moscow. Kishida has repeatedly called for efforts to prevent a similar crisis from taking place in the Indo-Pacific, where China’s assertive moves have heightened regional tensions.”
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