- Japanese Yen falls as US Dollar improves on higher Treasury yields.
- Japanese Chief Cabinet Secretary Yoshimasa Hayashi has expressed his willingness to use all available measures in the area of foreign exchange.
- Fed’s Goolsbee said the U.S. economy appears on track to achieve 2% inflation.
The Japanese Yen (JPY) trims gains as the US Dollar (USD) strengthens, boosted by improving Treasury yields. However, JPY volatility is expected to persist amid speculation of intervention by Japanese authorities following weaker-than-expected US Consumer Price Index (CPI) figures.
Japanese Chief Cabinet Secretary Yoshimasa Hayashi has said he is ready to employ all available measures on currency matters. Hayashi said the Bank of Japan (BoJ) would determine the details of monetary policy. He expects the BoJ to implement appropriate measures to sustainably and steadily achieve the 2% price target, Reuters reported on Friday.
The Bank of Japan (BoJ) may raise interest rates at its next meeting in July. This expectation strengthened the JPY, contributing to a fall in the USD/JPY pair.
Daily Market Wrap: Japanese Yen Sees Fluctuations Amid Threats of Intervention
- On Friday, Japanese Finance Minister Shunichi Suzuki stressed that rapid movements in the foreign exchange (FX) market are undesirable. Suzuki refrained from commenting on intervention in the FX market and declined to address media reports about Japan’s exchange rate checks, Reuters reported.
- Federal Reserve Bank of Chicago President Austan Goolsbee said on Thursday that the U.S. economy appears to be on track to achieve 2% inflation. “My view is that this is the path to 2%,” Goolsbee said, according to Reuters.
- The U.S. Consumer Price Index (CPI) declined 0.1% month-on-month in June, marking its lowest level in more than three years. The headline CPI rose 3.0% month-on-month in June, below the 3.3% increase in May and the market consensus of 3.1%.
- The core CPI, which excludes volatile food and energy prices, rose 3.3% year-on-year in June, compared with a 3.4% increase in May and the same expectation. Meanwhile, the core CPI rose 0.1% month-on-month, versus the expected and prior reading of 0.2%.
- Peter Boockvar, chief financial officer at U.S.-based Bleakley Financial Group, said yen weakness would trigger the BoJ to “react sooner rather than later,” according to Reuters.
- Reuters reported on Wednesday, citing unnamed sources, that the Bank of Japan will likely cut this year’s economic growth forecast and project inflation to remain around its 2% target in coming years at its meeting this month.
- Federal Reserve Chairman Jerome Powell stressed the urgent need to monitor the deteriorating labor market on Wednesday. Powell also expressed confidence in the downward trend in inflation, following his comments on Tuesday emphasizing the need for more data to strengthen confidence in the inflation outlook.
- According to a Bloomberg report on Tuesday, the Bank of Japan is holding three face-to-face meetings with banks, securities firms and financial institutions in the coming days. These meetings are aimed at assessing a feasible pace for reducing its purchases of Japanese Government Bonds.
Technical Analysis: USD/JPY bounces towards 159.50
USD/JPY is trading around 159.30 on Friday. The daily chart analysis shows a weakening of the bullish bias as it broke the lower boundary of an ascending channel pattern. Moreover, the 14-day Relative Strength Index (RSI) was slightly below the 50 level, indicating a decline in the pair’s price momentum.
The USD/JPY pair could find initial support near the psychological level of 109.00. A break below this level could reinforce the bearish sentiment, potentially triggering a retest of the June low near 104.55.
On the upside, immediate resistance is seen around the 21-day exponential moving average (EMA) at 109.82, followed by the lower boundary of the ascending channel near 109.95. A return within the ascending channel would likely improve sentiment for the USD/JPY pair, potentially targeting the upper boundary of the channel around the 113.20 level.
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 weakest currency against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | 0.02% | 0.14% | -0.08% | -0.15% | -0.10% | 0.03% | |
| EUR | 0.03% | 0.05% | 0.21% | -0.06% | -0.16% | -0.07% | 0.02% | |
| GBP | -0.02% | -0.05% | 0.16% | -0.12% | -0.19% | -0.13% | -0.04% | |
| JPY | -0.14% | -0.21% | -0.16% | -0.28% | -0.31% | -0.28% | -0.16% | |
| CAD | 0.08% | 0.06% | 0.12% | 0.28% | -0.07% | -0.02% | 0.07% | |
| AUD | 0.15% | 0.16% | 0.19% | 0.31% | 0.07% | 0.05% | 0.15% | |
| NZD | 0.10% | 0.07% | 0.13% | 0.28% | 0.02% | -0.05% | 0.11% | |
| CHF | -0.03% | -0.02% | 0.04% | 0.16% | -0.07% | -0.15% | -0.11% |
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.
