- Japanese Yen appreciates due to BoJ Governor Ueda’s hawkish speech in Parliament.
- The USD/JPY pair is losing ground due to the different policy outlooks between the two central banks.
- The US dollar lost ground following Fed Chair Powell’s dovish stance at the Jackson Hole Symposium.
The Japanese Yen (JPY) continues to strengthen for the second day in a row as hawkish comments from Bank of Japan Governor Kazuo Ueda contrast with dovish stance from Federal Reserve Chairman Jerome Powell.
BoJ Governor Ueda told parliament on Friday that the central bank could raise interest rates further if its economic projections are accurate. Moreover, the national Consumer Price Index (CPI) inflation data for July held at its highest level since February, reinforcing the BoJ’s hawkish stance on its policy outlook.
The US Dollar (USD) is depreciating as the likelihood of a rate cut in September increases. Fed Chairman Jerome Powell said at the Jackson Hole Symposium: “The time has come to tighten policy.” However, Powell did not specify when rate cuts would begin or their possible magnitude.
Traders anticipate that the US central bank could cut rates by at least 25 basis points in September. According to the CME’s FedWatch tool, markets now fully anticipate at least a 25 basis point (bp) rate cut by the Federal Reserve at its September meeting.
Daily Market Wrap: Japanese Yen Rises on Bolivarian Ueda’s Bolivarian Statement
- Bloomberg reported on Friday that Philadelphia Fed President Patrick Harker stressed the need for the U.S. central bank to cut interest rates gradually. Meanwhile, Reuters reported that Chicago Fed President Austan Goolsbee noted that monetary policy is currently at its most restrictive, and that the Fed is now focused on achieving its employment mandate.
- Bank of Japan (BoJ) Governor Kazuo Ueda addressed the Japanese parliament on Friday, stating that he is “not considering selling long-term Japanese government bonds (JGBs) as a tool to adjust interest rates.” He noted that any reduction in JGB purchases would only account for around 7-8% of the balance sheet, which is a relatively small decrease. Ueda added that if the economy aligns with their projections, there could be a phase where they could adjust interest rates slightly further.
- Japan’s National Consumer Price Index rose 2.8% year-on-year in July, holding steady for the third consecutive month and remaining at its highest level since February. In addition, the National CPI excluding fresh food rose 2.7%, the highest reading since February, in line with expectations.
- The US Composite PMI fell to 54.1 in August, a four-month low, from 54.3 in July, but remained above market expectations of 53.5. This indicates continued expansion in US business activity, marking 19 consecutive months of growth.
- The FOMC minutes from its July policy meeting indicated that most Fed officials agreed last month that they would likely cut their benchmark interest rate at the next meeting in September as long as inflation continued to cool.
Technical Analysis: USD/JPY depreciates near 144.00
USD/JPY is trading around 143.90 on Friday. The daily chart analysis shows that the pair is positioned below a descending trend line, suggesting a bearish bias. However, the 14-day Relative Strength Index (RSI) remains slightly above 30, indicating that the downtrend could continue.
On the downside, the USD/JPY pair could navigate the region around the seven-month low of 141.69, recorded on August 5. A break below this level could lead the pair towards the retracement support level at 140.25.
In terms of resistance, the USD/JPY pair could test the immediate barrier at the downtrend line around the psychological level of 145.00, followed by the nine-day exponential moving average (EMA) at the level of 145.74. A break above the nine-day EMA could support the pair to explore the region around the resistance-turned-retracement level at 154.50.
USD/JPY: Daily Chart
Japanese Yen PRICE Today
The table below shows the Japanese Yen (JPY) exchange rate against major currencies today. The Japanese Yen was the strongest currency against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | 0.11% | -0.23% | 0.01% | 0.24% | 0.16% | -0.08% | |
| EUR | -0.06% | -0.02% | -0.29% | -0.04% | 0.09% | 0.10% | -0.12% | |
| GBP | -0.11% | 0.02% | -0.38% | -0.06% | 0.10% | 0.05% | -0.17% | |
| JPY | 0.23% | 0.29% | 0.38% | 0.27% | 0.57% | 0.62% | 0.26% | |
| CAD | -0.01% | 0.04% | 0.06% | -0.27% | 0.22% | 0.18% | -0.09% | |
| AUD | -0.24% | -0.09% | -0.10% | -0.57% | -0.22% | 0.00% | -0.22% | |
| NZD | -0.16% | -0.10% | -0.05% | -0.62% | -0.18% | -0.01% | -0.23% | |
| CHF | 0.08% | 0.12% | 0.17% | -0.26% | 0.09% | 0.22% | 0.23% |
The heatmap shows percentage changes of major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the chart will represent the JPY (base)/USD (quote).
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by the performance of the Japanese economy, but more specifically by the policy of the Bank of Japan, the spread between Japanese and US bond yields, and risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key to the Yen. The BoJ has intervened directly in currency markets on occasion, usually to lower the value of the Yen, although it often refrains from doing so due to political concerns of its major trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its major currency peers. This process has been exacerbated more recently by a growing policy divergence between the BoJ and other major central banks, which have opted to sharply raise interest rates to combat decades-old levels of inflation.
The Bank of Japan’s stance of maintaining an ultra-loose monetary policy has led to an increase in policy divergence with other central banks, in particular with the US Federal Reserve. This favours the widening of the spread between US and Japanese 10-year bonds, which favours the Dollar against the Yen.
The Japanese Yen is often considered a safe haven investment. This means that in times of market stress, investors are more likely to put their money into the Japanese currency due to its perceived reliability and stability. In turbulent times, the Yen is likely to appreciate against other currencies that are considered riskier to invest in.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
