- The Japanese Yen depreciates due to a slowdown in domestic economic activities.
- Japan’s annualized GDP growth for the third quarter was 0.9%, slowing from the 2.2% growth recorded in the second quarter.
- Japan’s Kato stated that he would take appropriate measures to address excessive fluctuations in exchange rates.
The Japanese Yen (JPY) extends its losing streak against the US Dollar (USD) for the fifth consecutive session, following the release of Japan’s third quarter Gross Domestic Product (GDP) data on Friday. The bullish potential of the USD/JPY pair is supported by the strength of the US Dollar (USD). Traders are also preparing for the release of US October retail sales data, due later on Friday.
Japan’s preliminary Gross Domestic Product (GDP) grew 0.2% quarterly in the third quarter, up from 0.5% in the previous quarter, meeting market expectations. The country’s annualized GDP growth for the third quarter was 0.9%, beating the market consensus of 0.7%, but showing a sharp slowdown from the 2.2% growth recorded in the second quarter.
Japan’s Finance Minister Katsunobu Kato stated on Friday that he will take appropriate measures against excessive fluctuations in exchange rates (FX). Kato emphasized the importance of stable movements in exchange rates that reflect economic fundamentals and expressed concern about unilateral and abrupt changes in the market.
Meanwhile, Japan’s Economy Minister Ryosei Akazawa said he expects the modest economic recovery to continue, driven by improvements in employment and wages. However, Akazawa also emphasized the need to carefully monitor potential downside risks to global economies and volatility in financial and capital markets.
Japanese Yen Remains Under Pressure as US Dollar Nears Yearly Highs
- The Dollar Index (DXY), which tracks the performance of the US dollar against six major currencies, is around 107.06, marking its highest level since November 2023.
- On Thursday, Fed Chair Jerome Powell noted that the recent performance of the U.S. economy has been “remarkably good,” allowing the Fed to gradually reduce interest rates. Meanwhile, Richmond Fed President Thomas Barkin stated that although the Fed has made strong progress so far, there is still work to be done to maintain the momentum.
- The US Producer Price Index (PPI) rose 2.4% year-on-year in October, up from a revised 1.9% increase in September (previously 1.8%) and beating market expectations of 2.3%. Meanwhile, the core PPI, which excludes food and energy, rose 3.1% year-on-year, slightly above the 3.0% anticipated.
- BoJ Deputy Governor Shinichi Uchida on Thursday highlighted the need for financial institutions and authorities to be prepared for sudden deposit outflows due to digitalization and technological advances. Uchida also noted that the relationship between non-banking financial institutions and the banking sector has strengthened, any deterioration in the non-banking sector could impact the entire financial system through market channels.
- Japan’s Producer Price Index (PPI) rose 3.4% year-on-year in October, exceeding the expected 3.0% and previous readings of 3.1%. Meanwhile, the PPI rose 0.2% month-on-month, exceeding the flat growth expected for the month.
- The BoJ’s Summary of Views from its October meeting highlighted the division among policymakers over additional rate hikes. However, the central bank maintained its outlook, suggesting it could raise its benchmark rate to 1% by the second half of fiscal 2025, which would be equivalent to a total policy tightening of 75 basis points from the current rate.
- The US Consumer Price Index (CPI) rose 2.6% year-on-year in October, as expected. Meanwhile, the core CPI, which excludes the more volatile food and energy components, rose 3.3% in line with market forecasts.
Technical Analysis: USD/JPY rises near 156.50 as bullish bias prevails
USD/JPY is trading around 156.50 on Friday. The daily chart analysis shows a continued bullish bias, with the pair moving up within an ascending channel pattern. The 14-day Relative Strength Index (RSI) is just below the 70 level, supporting the bullish outlook. A break above the 70 level would indicate an overbought condition, which could lead to a downward correction for the pair.
The USD/JPY pair could target the upper boundary of the ascending channel near the level 159.70. A break above this level would reinforce the bullish sentiment and could push the pair towards its four-month high of 161.69, recorded on July 11.
On the downside, the USD/JPY pair could find support at the nine-day EMA around 154.65, followed by the lower boundary of the ascending channel at 153.90.
USD/JPY: Daily Chart
Japanese Yen PRICE Today
The table below shows the percentage change of the Japanese Yen (JPY) against major currencies today. Japanese Yen was the weakest currency against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.21% | -0.15% | 0.02% | -0.00% | -0.27% | -0.27% | -0.21% | |
| EUR | 0.21% | 0.05% | 0.21% | 0.22% | -0.05% | -0.07% | 0.00% | |
| GBP | 0.15% | -0.05% | 0.16% | 0.17% | -0.11% | -0.10% | -0.05% | |
| JPY | -0.02% | -0.21% | -0.16% | -0.00% | -0.29% | -0.30% | -0.23% | |
| CAD | 0.00% | -0.22% | -0.17% | 0.00% | -0.29% | -0.29% | -0.21% | |
| AUD | 0.27% | 0.05% | 0.11% | 0.29% | 0.29% | -0.00% | 0.05% | |
| NZD | 0.27% | 0.07% | 0.10% | 0.30% | 0.29% | 0.00% | 0.07% | |
| CHF | 0.21% | -0.00% | 0.05% | 0.23% | 0.21% | -0.05% | -0.07% |
The heat map shows percentage changes for 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 box will represent the JPY (base)/USD (quote).
The 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 differential between the yields of Japanese and US bonds or the risk sentiment among traders, among other factors.
One of the mandates of the Bank of Japan is currency control, so its movements are key for 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 the 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 depreciation of the Yen against its main currency pairs. This process has been exacerbated more recently by a growing policy divergence between the Bank of Japan 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 ultra-loose monetary policy stance has led to increased policy divergence with other central banks, particularly the US Federal Reserve. This favors the widening of the spread between US and Japanese 10-year bonds, which favors 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 in the Japanese currency due to its supposed 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.
