Japanese Yen to US Dollar (JPY/USD) Exchange Rate rallies as China concerns and Fed minutes boost demand

Japanese Yen to US Dollar exchange rate chart

The JPY briefly took a tumble on Thursday morning before rallying strongly against several major peers including the USD and GBP.

Early in the morning the Yen dropped against its peers after data showed that machinery orders in the Asian nation fell more than expected. Orders for new machinery in February plunged by 8.3%, a sharper fall than the forecast drop of 0.3%.

The Yen then recovered after data showed that Chinese imports and exports fell more than forecast in March, raising fears of a slowdown in the world’s second largest economy and prompted demand for the safe haven Yen.

Chinese yearly exports declined by -6.6% and yearly imports tumbled by -11.3%. Economists had been expecting figures of a rise in both. Imports were forecast to rise by 2.4% whilst exports would go up by 4%.

The Yen was further supported against the US Dollar after the ‘Greenback’ took a tumble after the Federal Reserve’s March policy meeting minutes revealed that the Central Bank’s policy makers voted unanimously to scrap a threshold that would have triggered a rise in interest rates.

“Participants agreed that the existing forward guidance, with its reference to a 6.5% threshold for the unemployment rate, was becoming outdated as the unemployment rate continued its expected gradual decline. Most participants felt that the quantitative thresholds had been very useful in communicating policy intentions when employment was far from mandate-consistent levels, but, with the economy having moved appreciably closer to maximum employment, the forward guidance should emphasize that the Committee is focusing more on a broader set of economic indicators,” said the minutes.

The Japanese Yen could make further gains later in the session if today’s US jobless claims data disappoints the market. A weaker figure is unlikely to ease investor concerns over the strength of the US economy.