The most significant thing we know about the factors that affect the USD JPY Forecast is the difference in interest rates set by the Bank of Japan and the US Federal Reserve.
Most of the time, the USD JPY Forecast has us looking at the one thing that this pair has traditionally been associated with (carry trade). In a carry trade, we talk about an investment tool that involves the borrowing of money by speculators at low interest rated and exchanging this for high-yield assets in other currencies.
Before the bubble burst in 2008, creating that financial crisis that gave us ‘The Big Short,’ many of the investors in the market would utilize the fact that the interest rates set by the Bank of Japan were low, and bought the yen heavily, then invested the money somewhere else.
Back then, our forex forecast showed this to be very profitable, but the process comes with a high level of risk because of the volatility existing in the forex markets. The USD JPY News shows this very clearly, when sudden and unexpected shifts happen, causing changes that could make you lose money.
Since then, many things had changed after that economic downturn all those years ago. The interest rates differential between Japan and the US is narrower now. From this, we have witnessed the unwinding of the carry trade as the Yen’s value soared.
Several analysts on our team and around the world have seen a trend pointing the return of the Yen’s carry trade capabilities earlier this year, after the G7 made a move, effectively curbing the strength of the Yen.
Some of the critical factors we now have to look at when making USD JPY Forecast include not just the USD JPY News but also the following things:
As with any other currency pair, the USD JPY Forecast relies heavily on the economic state of the countries we are looking at. The currency pair corresponds to the current state of the respective economies.
We look at more than just how the economies are doing separate from each other. In our forex forecast, we also look at how they correspond in terms of their relationship. Our analysts do not just stop at that. They also look at the performance of the Asian economies in general and how they affect Japan.
The correlations here can be broken down into the following categories:
With these three factors, the economic angle is complete. When we face an economic downturn in the US, the Yen rises, and when the situation is flipped, the USD rises. Our forex forecast can predict any of these events, based on the data from all economies involved in any changes.
Because the Yen and the Dollar are both from two reliable and stable economies, they are only affected by the most significant economic and global events.
In general, the USD JPY Forecast usually inclines toward the USD when Japan is importing more than what they are exporting. When Japan buys more than they sell, the Yen will weaken. As one of the major exporters in the world, trading, in export/import terms, is usually balanced well.
Economically, Japan is a powerhouse that does not struggle when it comes to keeping the balance. For example, their trade deficit narrowed a lot in November 2019 from JPY 739 billion in 2018 to JPY 82 billion. Most USD JPY Forecast had the deficit narrowing by JPY 369, but they exceeded expectations.
We looked at the sales tax hike in October, which led to exports dropping for 12 months consecutively. The USD JPY Forecast was easier to make because we knew the shipments to China and the US were declining, shifting the balance.
Japan is one of the countries which suffers from natural disasters a lot. It is located in an area we call the Ring of Fire. Out of the five costliest natural disasters in recent history, two happened in Japan. The country has also been the location of some of the ten worst natural disasters in the 21st century.
All these things affect the USD JPY Forecast because of the direct effect they have on the economy. A recent example of this would have to be the 2011 Tōhoku earthquake and tsunami, which led the Fukushima Daiichi Nuclear Disaster.
In a country with so many disasters that cannot always be predicted or even mitigated in any way, it is essential that we keep up with the USD JPY News to stay ahead. All the signals you will get from us come from an analysis of all this data with right information.
The Japanese yen is a currency that does not grow very fast. It has been in a stagnation period for a while now, and the US economy outpaces it frequently. With a trend like this one, the USD JPY Forecast is more straightforward.
The trend is most likely going to be the same way for a while. At the moment of writing this, our analysts say that the Yen is on a downward trend. Not too long ago, the Bank of Japan was considering whether they should increase an already massive asset purchase program.
The government of Japan is always hard at work to implement measures that keep the economy afloat. There is still something to be gathering from looking at the USD JPY News to make sure that any developments and programs by the government do not happen without our knowledge.
Investing in the Forex market means being able to see all these factors at the same time. No matter how good you may, sometimes, miss something. We encourage the use of signals because we have multiple people working on just one pair to make sure that you go ahead of the curve.