The US Dollar to Japanese Yen is at 109.62 levels on Tuesday, September 14, 2021. The weak US Dollar, Covid infections, and political crisis hit USD/JPY.
US Dollar to Japanese Yen at 109.60 Levels
The Japanese Yen surged past the psychological barrier at 110 last week but could not maintain momentum and slid lower. The USD/JPY has taken support at this level at 109.60 for four weeks. The US Dollar to Japanese Yen trades within the 109.60 to 110.10 levels for almost a month. It is unable to sustain a move in either direction in the forex market.
The US Dollar to Japanese Yen foreign currency exchange is trading lower at 109.62, after a good start at the beginning of trade on September 14 at 110.14 levels.
The Japanese Yen to US Dollar is at 0.9126 levels in the foreign exchange market.
USD/JPY Hit by Economic Slows Down with Resurgence of Covid
Japan’s economy is affected by the slowdown caused by the resurging Covid infections. The Olympics has been the chief cause of the rising infection rate say, experts.
PPI year-on-year shows a slight decline from 5.6% to 5. It is the sixth consecutive month of increasing producer price inflation. An increase in inflation was evident in beverages and foods, chemicals, petroleum and coal products, iron and steel, metal and non-metal products, etc.
Revised Industrial production m/m dropped to -1.5% in July 2021, remaining unchanged, month on month. The decline indicates the rising Delta covid-19 strain that forced the country to bring a state of emergency and curbs. Businesses are working fewer hours, and people stay indoors for safety. Restaurants and bars remain closed.
Industries like motor vehicles, electrical machinery, information and communication, and electronics equipment show a decline in production with the state of emergency declared in the Japanese economy. The Covid pandemic is restricting business activity. Net trade has gone down as imports are more than exports.
Economy watchers sentiment has declined from 48.4 in July 2021 to 34.7 in August 2021. The economy watchers sentiment index indicates that the service sector has been the worst hit by the pandemic. The service sector includes people who deal directly with consumers, such as barbers, waiters, and taxi drivers.
Final GDP q/q got better from 0.3% to 0.5%. The annual economic growth in Japan shows improvement from 1.3% to 1.9%. The accelerated virus vaccination drive brought a rebound in the economy. Household consumption, government spending, and business investments have recovered after the easing of lockdown. But the Olympic Games have affected the economy again, with infections increasing. The increasing number of visitors from outside the country is bringing up infection rate, say experts.
Political Crisis Arises in Japan from Pandemic
Japan hosted the Olympics during the pandemic. Since the start of the Olympics on July 23, 2021, almost 170,000 people have contracted covid-19 in Japan. Japanese hospitals are filling up quickly, and only a quarter of the public are vaccinated. A nationwide state of emergency was called.
The increase in pandemic cases due to the Olympics is a major cause for the declining popularity of Prime Minister Yoshihide Suga. Japan awaits a new prime minister as Suga announced that he would not run for election. People want a competent leader who is adept in pandemic management.
The pandemic has destroyed the reputation of Suga as Prime Minister. People are unhappy with the Olympics, as the health of the local people is at stake from viral infections. The coronavirus has brought disparity between the rich and the poor, especially in the tourism industry.
Prime Minister candidates Fumio Kishida, Taro Kono, and Sanae Takaichi are in close competition for the looming election. They have promised to bring in economic recovery through stimulus packages.
An earthquake of magnitude 6.2 hit Japan on September 13. So far, there is no warning or announcement of a tsunami.
Major Currency Pairs
The US Dollar Index is at the 92.47 level on Tuesday, September 14, 2021.
The 10-year yield fell to the 1.30% region. Discouraging news from the United States drags the greenback lower.
The US Dollar Index does not show much momentum upwards as covid cases are resurging in countries like Singapore and Britain. The tapering process may start by next year, says the Fed.
AUD/JPY is cautious ahead of the RBA speech. Governor Philip Lowe will deliver a report on the Delta’s impact on the economy. Lowe confirms that the Covid variant has affected the economy. Â AUD/USD is on a downward momentum as it moves below key supports at 80.50 levels.
EUR/JPY is trading at two-week lows at 129.65 on Tuesday, September 14, 2021. The ECB has announced tapering of pandemic stimulus. Interest rates will remain unchanged, says the central bank.
GBP/JPY trades at 151.90 levels on September 14, moving within a narrow band between 152.20 and 151.80 levels for the past eight trading sessions. Though the British Pound to the Japanese Yen moved higher during early trading hours on Tuesday, it faced stiff resistance at these levels and slid lower.