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USD/JPY at Nine-Month Highs at 90.00 Levels in March 2021

USD/JPY moves towards a nine-month high at 109.00 levels, reaching towards the July 2020 highs. It has been on an uptrend for the past three months.

USD/JPY Powers Ahead

The USD/JPY shows a strong positive move in 2021, as it has been on the increase in all three months of 2021. The US dollar index against the Japanese yen has powered ahead reaching nine-month high levels of 109.45 in July 2020.

106.35 was a major support to the USD/JPY in 2018 and 2019. The US dollar index against the Japanese yen breached below this level and touched 103.00 levels in December 2020. In March 2020 it moved even lower to 101.20 levels during the outbreak of the coronavirus pandemic. Currently, the currency pair has moved ahead in January, February, and March 2021, surging past 109 levels on Tuesday, March 9, 2021.

USD/JPY At Nine-Month Highs
USD/JPY At Nine-Month Highs

USD/JPY Gains Strength with Stronger Manufacturing Activity

Final Manufacturing PMI has been good in February at 51.4, while it was previously at 49.8, showing that manufacturing activity is picking up in Japan, according to data released by the Jibun Bank Manufacturing PMI. Numbers above 50 indicate that the economy is gaining strength. Exports are on the increase in December and January. An increase in domestic and foreign markets will help the economy recover faster once consumers start spending, say experts.

Related:  USD/JPY touches January Highs at 104.68 following Better Economic Data

The Unemployment Rate remains the same at 2.9% for January and December, though it is much below the expected rate at 3.0%. The number of unemployed was at 2.03 million in January, and the figure has decreased by 70 thousand in February.

Monetary base data released by the Bank of Japan shows that it has gone up to 18.9% in January, while in December 2020, it was 18.3%.

Consumer confidence has improved in Japan, rising to 33.8, much better than the previous data at 29.6, and above expectations of 29.9.

Bank lending year-on-year has improved to 6.2%, while previously it was at 6.0%.

Leading indicators in February have improved to 94.9%, from the previous data in January at 96.6%. Leading indicators include a rise in employment, production, consumer confidence, new orders, stock prices, housing, money supply, and interest rates, which have helped boost the economy.

The economy shows fast recovery after declining after the pandemic affected economic activities in 2020. Tourism, manufacturing, and exports were the sectors that were worst affected in 2020. Doubts are raised about the Tokyo Olympics set to start in July 2020, postponed from last year.

Covid in Japan

Covid cases across the globe are moving higher, even as the vaccination process is moving ahead at a brisk pace, which continues to hold safe-haven currencies like the US dollar and the Japanese yen.

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Japan has been able to control the Covid infections, keeping lockdown measures relatively low. “We have taken a focused approach”, states Prime Minister Yoshihide Suga. However, the second wave has infected many, causing concern. Japan extended its emergency state in various parts until March 7.

The first quarter of 2021 may show contraction, but stronger than expected growth in the last quarter of 2020 is a sign that the economy will gain strength once the emergency ends, say experts.

US Dollar Index

The US dollar is now at a three-month peak, with strong payroll reports showing an economic recovery in the US and other global countries.

The huge $1.9 trillion stimulus package has done well to improve consumer confidence. The amount is larger than what was provided in the December stimulus, which provided a supplement of $300 for 11 weeks.

The US dollar has gained tremendous strength, moving above the 92.00 zones. It almost touched the 92.50 level during intra-day trading on Tuesday, March 9, 2021.

EUR/JPY

At the ECB meeting on Thursday, a decision on the increasing eurozone yields will be taken to prevent a further increase in bond yields. It ended at 129.12 on Tuesday, March 9.

The EUR/JPY is moving within a range between 129.50 and 128.50 for the past two weeks. It surged ahead on March 24 from 127.70 to 128.90.

GBP/JPY

The chart depicting the GBP/JPY currency pair is almost like a staircase, showing a steady increase in value every day. The Sterling against the Japanese yen started the year 2021 at 139.70 levels and has increased gradually towards the 150.80 levels in March 2021.

Related:  UK CPI provides a brief respite for the Pound whilst US data stagnates

AUD/JPY

The year 2021 has been good for the Australian dollar against the Japanese yen. The AUD/JPY is currently at 83.62 levels, though it started at 79.00 levels in January.

Crude Prices

Oil prices have gone up as missiles were fired on Saudi Arabia on Sunday. The OPEC and allies had decided not to increase the supply of crude oil in April. The firing has caused panic among the oil countries, raising concerns about production. Brent went up to $70.45 per barrel, while the US crude oil went to $67.17 per barrel. Crude prices have gone past the $70 level since the pandemic.

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