Fundamental analysis
27 May, 2022
During most of the European trade, the Japanese yen strengthened against the dollar and continued to move in a narrow range of oscillations. Price inflation in Tokyo in May was slower than expected (1.9% versus the expected 2%), which is more in favor of a slowdown in the yen. The second reading of the US GDP yesterday showed a gloomier picture of the state of the US economy in the first quarter. There was a decline of 1.5% year on year (and not -1.3% as expected). In addition, the day before yesterday's notes from the last meeting of the Fed showed a slightly milder hawkish tone, which was reflected in a milder withdrawal of the US currency. The escalation of tensions between the United States and China is affecting the troubled mood of market participants. Asian stock indices fell and (oversold) yen strengthened. Currency traders continued to push sales on the U.S. currency, lowering expectations of strengthening due to rising US interest rates. The withdrawal of bond yields in the United States is also in favor of the yen, while the "safe haven" currencies - the Swiss franc and the yen - showed significant investor interest last week. At around 13:45, the US dollar was exchanged for 126.89 yen, which represents a strengthening of the Japanese currency by 0.16% since the beginning of trading last night. At 14:30, the personal consumption (inflation) index (PCE) will be published in the USA in April, which follows the Fed in conducting its monetary policy.
