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.