The Dollar against the Yen trades at a 5-year high at 117.28, weakening to levels last seen in January 2017. The USD/JPY rallies for the fifth consecutive day.
There is some progress in talks with Ukraine, says Russian President Vladimir Putin. There is a positive shift in the negotiations, said the president on Friday.
Bank of Japan and the Fed will meet next week.
Dollar Against the Yen Outlook
USD/JPY is on a negative trend from January 2021. USD/YEN is at 117.28 as it trades at five-year high levels, at levels last seen in January 2017.
Usually, investors run to safe-haven assets during war or political turmoil. The US Dollar, the Japanese Yen, and the Swiss Franc are haven currencies.
But the safe-haven Japanese Yen took a contrarian direction, as it weakened to a 5-year high. Japan depends on crude oil imports to meet domestic demands. Japan imports almost 80% of crude oil requirements to meet domestic needs. Import costs are surging higher with the cost of crude going up., which reflects on high commodity prices, hurting the Dollar against the Yen prices.
Hike in Rates Expected at Fed Meet
The Fed will meet next week, and investors expect the Fed to hike rates by a quarter percentage. Bank of Japan will also meet next week.
Invested expected the Fed to hike rates by 0.5%. But the Russian attack on Ukraine has changed the outlook, and a hike of 0.25% can be expected.
US annual inflation rate is at 7.9%, the highest level since 1982. The Dollar is surging ahead positively. If attacks on Ukraine continue, the Dollar may rise higher, say analysts. Any weakness in the Dollar is the right time to buy the greenback, say experts.
The Dollar Index is on its fifth weekly gain. The DXY faces resistance at the 99.47 level.
The US Dollar Index is on a bull run as it is within reach of the $100 mark. The Dollar Index is at levels last seen in May 2020.
The Dollar Index took support at the $89.77 levels in December 2020 and May 2021.
US Consumer Prices at 40-year High
US Consumer prices are higher by 7.9% year on year. Rising consumer prices bring a spike in inflation rates too. Inflation is at a four-decade high. The Fed may hike rates this month to curb inflation, say experts.
Food, energy, and shelter are the chief sectors affected by high inflation. Household spending has come up as high inflation affects each family.
Rising prices draw heavy criticism from the Republicans. President Biden and Fed Chairman are bringing in measures to curb high prices.
Unemployment claims have gone up from 216k to 227k. The number of people seeking claims has gone up, which means that unemployment is high.
Factory order jumps higher 1.4% in January from the estimated 0.7%. Durable goods order has come up.
Manufacturing PMI remains marginally lower from 57.5 to 57.3, which indicates that the economic health of the US has not changed much.
Euro Region on Interest Rate Hike
The ECB says that an interest rate hike can be expected by the end of 2022. High inflation must be set right, says the ECB.
ECB President Christine Lagarde says that the economic outlook has slid to the downside. The war has hit economic activity and caused inflation to soar higher.
GBP/USD is at $1.3089, at a 16-month low. An interest rate hike is expected soon. A rise in oil prices triggers high inflation in the US, the UK, and the EU region.
Russian Forces At Ukraine
The Russian invasion of Ukraine is on its third week. The World Bank states that the Russian attack on Ukraine is an economic catastrophe.
Russian Foreign Minister Sergei Lavrov held high-level talks with his Ukraine counterpart Dmytro Kuleba.
Despite severe sanctions imposed by the Western countries, Russia continues to press on with its war against Ukraine. Ukraine has offset the Russian attack with unexpected boldness.
The US and the European Union raised sanctions on Russia in an effort to curb the Russian troops. President Joe Biden warns Russia that the US will revoke its permanent normal trade relations with Russia. Further, the US would ban all imports from Russia, says President Biden. The supply chain will be affected, claim users.
Meanwhile, the Ruble has been on a free fall as the sanctions impact the Russian banks. The Russian stock market is shut.
The Ukraine conflict remains unpredictable. Any positive outcome from talks will help to stabilize the global economies. Countries affected by the Covid pandemic had just started to recover. But the war crisis is hurting consumer sentiment as crude prices soar. Inflation is high, and commodity prices are soaring with high crude prices. Household expenses are peaking, and industrial production faces a severe supply-chain crisis. Russia and Ukraine are chief exporters of crude and grains.
Crude prices surged past $100 with high inflation in the country. High gasoline price is the cause of high energy prices.