- USD / JPY is recovered at nearly 144.50 while the US dollar abandoned the earnings of the day before before the US PNF data for April.
- The softening of American-China trade tensions has increased the appetite for the risks of investors.
- Boj Ueda said that monetary policy plans were influenced by Trump's pricing policy.
The USD / JPY pair faces a sale pressure after three -day recovery moves around 146.00, earlier during the day, and corrected almost 144.50 during European negotiation hours on Friday. The pair retracts under the name of the US dollar index (Dxy), which follows the value of the greenback against six major currencies, abandons the gains and slides from Thursday to almost 99.65.
The US dollar (USD) makes the earnings from the day before the day before while investors become cautious before non-agricultural United States (US) (PNF) for April, which will be published at 12:30 p.m. GMT. Economic data should have been severely affected by the Price Agenda of US President Donald Trump.
Economists expect American employers to hire 130,000 fresh workers, which are significantly less than 228K's March. The unemployment rate is considered stable at 4.2%. The signs of cooling labor market conditions would strengthen market expectations that the Federal Reserve (Fed) would begin to reduce interest rates in the June political meeting.
Meanwhile, the feeling of the market has become favorable to risky assets in the hopes of de-escalation in the trade war between the United States and China. The Chinese Ministry of Commerce has reported its desire to come to the table for commercial discussions with the United States with the stipulation that talks should be based on “sincerity”.
Although the Japanese Yen (JPY) faced the US dollar on Friday, its prospects became uncertain because the Japan Bank (BOJ) reported a delay in the plans to increase interest rates more in the face of the prices announced by the US President Trump. “We are going to enter a period in which inflation and wage growth will probably slow down,” said Boj governor Kazuo Ueda at the press conference, Reuters reported.
US dollar FAQ
The US dollar (USD) is the official currency of the United States of America and the “de facto” currency of a large number of other countries where it is in circulation alongside local tickets. It is the most negotiated currency in the world, representing more than 88% of all global turnover, an average of 6.6 billions of dollars of transactions per day, according to data from 2022. After the Second World War, the USD took over from the British book as a global reserve currency. For most of its history, the US dollar was supported by gold, until the Bretton Woods agreement in 1971 when the Order stallion left.
The single most important factor on the value of the US dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to reach price stability (controlling inflation) and promoting full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices are increasing too quickly and inflation is greater than the 2% target of the Fed, the Fed will increase rates, which helps the USD value. When inflation falls below 2% or the unemployment rate is too high, the Fed can reduce interest rates, which weighs on the greenback.
In extreme situations, the federal reserve can also print more dollars and promulgate a quantitative relaxation (QE). QE is the process by which the Fed considerably increases the credit flow in a blocked financial system. This is a non -standard political measure used when credit has dried up because the banks will not lend themselves (by default of the fear of the counterpart). This is a last appeal when the simple drop in interest rates is unlikely to achieve the necessary result. It was Fed's weapon of choice to combat the credit crisis that occurred during the great financial crisis in 2008. It implies the Fed Print more dollars and use them to buy US state bonds mainly from financial institutions. QE usually leads to a lower US dollar.
The quantitative tightening (QT) is the opposite process by which the federal reserve ceases to buy obligations from financial institutions and does not reinvest the principal of the obligations it holds in new purchases. It is generally positive for the US dollar.
