© Reuters This week the euro advanced 2% against the Japanese yen. Why?
FXNEWSTODAY – The Asian market rose against Friday, resuming its gains that were temporarily halted yesterday in breathtaking trades, recording its highest level in two months, moving closer to achieving its biggest weekly gain since last June.
Since the start of the week, the euro has appreciated about 2% against the yen, due to the reassessment of European and Japanese price expectations, which has led to renewed concerns about the continuation of the current gap in interest rates between Europe and Japan. , which could continue until the end of this year.
Aggressive comments from European Central Bank officials and weak economic data in Japan have reduced the chances of a European interest rate cut and the Bank of Japan’s exit from its negative interest rate policy early this year. year.
Price display
Euro exchange rate against yen today
The euro rose against the yen by 0.4% to (161.77), its highest since November 30, from today’s opening price of (161.14), and recorded its lowest level at (160 ,97).
Yesterday the euro lost less than 0.1% against the yen, the first loss in the last four days, amid correction and profit-taking trades.
Weekly transactions
During this week’s trading, which will officially end with today’s price fixing, the single European currency “Euro” has appreciated so far by 2.0% against the Japanese currency “Yen” and is preparing to achieve its third gain consecutive weekly. , and the biggest weekly gain since June 2023.
Interest rate gap
The current interest rate gap between Europe and Japan stands at 460 basis points in favor of the European interest rate, and is expected to remain in this range for as long as possible this year, which supports appreciation of the euro against the yen.
European interest
Some members of the Council of the European Central Bank have opposed the possibility of lowering European interest rates starting next May, in light of the existing risks linked to inflation and high prices, and the continuing increase in wage pressures.
European Central Bank President Christine Lagarde said at the World Economic Forum in Davos that interest rates in the euro zone could fall in the summer and not in the spring.
The governor of the German Central Bank and member of the European Central Bank, Joachim Nagel, a hawk, said: It is too early to talk about interest rate cuts, as inflation is very high. We want to see more data.
The governor of the Austrian Central Bank and member of the European Central Bank, Robert Holzmann, said this week in Davos: Geopolitical risks in the Middle East and shipping disturbances in the Red Sea pose a serious threat to inflation.
Holzman warned that the ECB should not count on cutting interest rates at all in 2024.
European Central Bank Vice President Louis de Guindos said last week that keeping interest rates high for a long enough period will help reach the medium-term inflation target of 2%.
Japanese interest
Data released recently in Tokyo showed easing inflationary pressures on monetary policy makers at the Bank of Japan and reduce the need to early eliminate ultra-easy stimulus policy tools and negative interest rates.
Artistic appearance
The euro against the yen exceeds the second target – Analysis – 18-1-2024
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2024-01-19 06:56:00
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