Yen Jumps to 2-Week High as Dollar Loses Strength
The Japanese Yen is getting stronger — and it just hit its highest level in the last two weeks against the US Dollar.
This happened after Japan surprised everyone with some solid economic data. In March, Core Machinery Orders in Japan rose by 13%. Experts were actually expecting a fall, but the numbers came in strong. This has raised hopes that the Bank of Japan might increase interest rates soon.
At the same time, the US Dollar is under pressure. Investors are getting worried about the US government’s rising debt. There’s talk of adding another $3 to $5 trillion in spending, and that’s making markets nervous. A weak 20-year bond auction and a recent credit rating downgrade by Moody’s added more stress to the Dollar.
Because of all this, traders are moving their money to safer places, like the Japanese Yen and Gold. That’s why the USD/JPY pair has now dropped to around 143.30, the lowest since May 7.
So in short, Japan’s strong numbers are lifting the Yen, while worries in the US are dragging the Dollar down.
Impact: It is assumed that the Yen might stay strong if Japan continues to post good economic data. USD/JPY could possibly fall further if the Bank of Japan gives any hint of raising interest rates or if US debt concerns grow.