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United States dollar agonist Japanese Yen

A delay in increasing interest rates is detrimental for the JPY but beneficial for USD/JPY, as it maintains a significant interest rate gap between the US and Japan. This gap, with the Federal Reserve's rate at 5.5% and the BoJ's at 0.1%, currently stands at approximately 540 basis points.

 Such a gap favors the US Dollar over the Yen, encouraging investors to preferentially allocate their capital in Dollars where higher interest can be earned.

The recent uptick in USD/JPY follows a sharp decline observed on Wednesday subsequent to the release of US Consumer Price Index (CPI) data, which showed a lower-than-expected increase of 0.3% in April, falling short of the projected 0.4% rise.

Dr. Kamaran Qader Yaqub

Financial Consultant at Investment Spot company. 

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