Ella 
The Japanese yen (JPY) extended its downward trend against the U.S. dollar for the fourth consecutive day on Friday, falling to more than a week low in Asia. It is increasingly unlikely that the Bank of Japan (BOJ) is about to change its policy stance, becoming a key factor weakening the yen. Indeed, Bank of Japan Governor Kazuo Ueda gave a slightly bleak assessment of the economy on Monday and dashed hopes of a rate hike next week.
On the contrary, the US producer price index (PPI) was higher than expected, which increased market speculation that the Federal Reserve (Fed) will reiterate its “higher level for a longer period” interest rate policy to reduce still-firm inflation. This is therefore seen as a tailwind for the US dollar and provides further support for USD/JPY. This masks risk-averse impulses to a greater extent and does little good for the yen’s safe-haven status or USD/JPY gains.
Meanwhile, the results of Japan’s spring wage negotiations showed that most companies have agreed to union demands for wage increases, which should allow the Bank of Japan to exit negative interest rates in the coming months. Therefore, it remains to be seen whether bulls can seize the opportunity for gains or choose to wait and see ahead of next week’s key central bank risk events, namely the Bank of Japan policy decision on Tuesday and the outcome of Wednesday’s two-day Federal Reserve meeting.
