- The Japanese yen appreciated as rising job gains reinforced the likelihood of further BoJ rate hikes.
- BoJ’s Takata said that “if the economy and prices move as expected, we will adjust the policy rate in several stages.”
- The US nonfarm payrolls report is expected to show 160,000 new jobs in August, up from 114,000 in July.
The Japanese Yen (JPY) continues its winning streak for the fourth consecutive session as rising real wages in July fuel speculation that the Bank of Japan (BoJ) could introduce another interest rate hike before the end of 2024. Additionally, the USD/JPY pair has encountered headwinds from a weaker US Dollar (USD), boosted by dovish comments from Federal Reserve (Fed) officials.
Bank of Japan (BoJ) Board member Hajime Takata said on Thursday that “if the economy and prices move in line with our forecast, we will adjust the policy rate in several stages.” Takata also mentioned that the domestic economy is recovering moderately, despite some signs of weakness. Although stock and currency markets have seen significant volatility, he noted that the BoJ still sees achieving its inflation target within reach.
Traders are likely to look to Friday’s release of labor market data, including U.S. nonfarm payrolls (NFP), for more insight into the potential size of an anticipated rate cut by the Federal Reserve (Fed) this month.
Daily Market Wrap: Japanese Yen Extends Gains on BoJ’s Bolivarian Tone
- Chicago Fed President Austan Goolsbee said on Friday that the long-term trend in the labor market and inflation data warrant the Fed easing interest rate policy soon and then steadily over the next year. FXStreet’s FedTracker, which measures the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Goolsbee’s words as neutral with a score of 3.8.
- The ADP employment change showed on Thursday that private sector employment rose by 99,000 in August, after the increase of 111,000 in July and below the estimate of 145,000. Meanwhile, US initial jobless claims rose to 227,000 for the week ended August 30, compared to the previous reading of 232,000 and below the initial consensus of 230,000.
- Japan’s job gains rose 3.6% year-on-year, a slowdown from June’s 4.5% increase but the strongest since January 1997, beating market expectations of 3.1%.
- San Francisco Federal Reserve President Mary Daly said Wednesday that “the Fed needs to cut the policy rate as inflation is declining and the economy is slowing.” As for the size of a potential rate cut in September, Daly noted, “We don’t know yet.” FXStreet’s FedTracker, which measures the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Daly’s remarks as neutral with a score of 3.6.
- Atlanta Federal Reserve President Raphael Bostic said the Fed is in a favorable position but added that they should not maintain a restrictive policy stance for too long, according to Reuters. FXStreet’s FedTracker, which measures the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Bostic’s words as neutral with a score of 4.6.
- Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said on Wednesday that he is “closely monitoring domestic and international market developments with a sense of urgency.” Hayashi stressed the importance of conducting fiscal and economic policy management in close coordination with the Bank of Japan (BoJ).
- US JOLTS job openings fell to 7.673 million in July from 7.910 million in June, marking the lowest level since January 2021 and falling short of market expectations of 8.10 million.
- Jibun Bank’s services PMI data on Wednesday. The index was revised to 53.7 in August from an initial estimate of 54.0. Although this marks the seventh consecutive month of expansion in the services sector, the latest figure remains unchanged from July.
Technical Analysis: USD/JPY drops towards 143.00, followed by seven-month lows
The USD/JPY is trading around the 143.30 level on Friday. A check of the daily chart shows that the nine-day exponential moving average (EMA) remains below the 21-day EMA, indicating a persistent bearish bias. Additionally, the 14-day relative strength index (RSI) is near the 30 level, reinforcing the bearish momentum but also hinting at the possibility of an upside correction soon.
In terms of support, the USD/JPY pair is falling towards the seven-month low of 141.69, recorded on August 5. Additional key support appears at 140.25, which is the lowest level since July 2023.
On the upside, the USD/JPY pair could first find a barrier at the nine-day EMA around 144.60, followed by the 21-day EMA at 146.02. A break above these EMAs could weaken the bearish sentiment and push the pair towards the psychological level of 150.00.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | 0.01% | -0.19% | -0.05% | 0.12% | 0.14% | -0.06% | |
| EUR | 0.02% | 0.03% | -0.19% | -0.04% | 0.14% | 0.14% | -0.04% | |
| GBP | -0.01% | -0.03% | -0.21% | -0.05% | 0.12% | 0.12% | -0.07% | |
| JPY | 0.19% | 0.19% | 0.21% | 0.16% | 0.33% | 0.31% | 0.12% | |
| CAD | 0.05% | 0.04% | 0.05% | -0.16% | 0.16% | 0.19% | -0.02% | |
| AUD | -0.12% | -0.14% | -0.12% | -0.33% | -0.16% | -0.00% | -0.20% | |
| NZD | -0.14% | -0.14% | -0.12% | -0.31% | -0.19% | 0.00% | -0.20% | |
| CHF | 0.06% | 0.04% | 0.07% | -0.12% | 0.02% | 0.20% | 0.20% |
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.
