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- Japanese Yen experiences volatility due to more FX intervention risks
Japanese Yen experiences volatility due to more FX intervention risks
- The Japanese Yen edges lower as the US Dollar improves due to higher Treasury yields.
- Japanese Chief Cabinet Secretary Yoshimasa Hayashi has expressed readiness to utilize all available measures concerning forex matters.
- Fed’s Goolsbee stated that the US economy appears to be on track to achieve 2% inflation.
The Japanese Yen (JPY) trims its gains as the US Dollar (USD) strengthens, buoyed by improved Treasury yields. However, the JPY's volatility is anticipated to persist amid speculation of intervention by Japanese authorities following weaker-than-anticipated US Consumer Price Index (CPI) figures.
Japanese Chief Cabinet Secretary Yoshimasa Hayashi stated his readiness to employ all available measures regarding forex. Hayashi noted that the Bank of Japan (BoJ) would determine the specifics of monetary policy. He expects that the BoJ will implement appropriate measures to sustainably and steadily achieve the 2% price target, reported by Reuters on Friday.
The Bank of Japan (BoJ) could raise interest rates at its upcoming July meeting. This expectation bolstered the JPY, contributing to a decline in the USD/JPY pair.
Daily Digest Market Movers: Japanese Yen experiences fluctuations amid intervention threats
- On Friday, Japanese Finance Minister Shunichi Suzuki emphasized that rapid foreign exchange (FX) movements are undesirable. Suzuki refrained from commenting on FX intervention and declined to address media reports regarding Japan's FX rate checks, as reported by Reuters.
- Federal Reserve Bank of Chicago President Austan Goolsbee said on Thursday that the US economy appears to be on track to achieve 2% inflation. Goolsbee stated "My view is, this is what the path to 2% looks like," according to Reuters.
- The US Consumer Price Index (CPI) declined by 0.1% month-over-month in June, marking its lowest level in over three years. The headline CPI increased by 3.0% MoM in June, down from a 3.3% rise in May and below the market consensus of 3.1%.
- The core CPI, which excludes volatile food and energy prices, rose by 3.3% year-over-year in June, compared to May's increase of 3.4% and the same expectation. Meanwhile, the core CPI increased by 0.1% month-over-month, against the expected and prior reading of 0.2%.
- Peter Boockvar, chief financial officer at US-based Bleakley Financial Group, said that the Yen's weakness will trigger the BoJ to "react sooner rather than later," per Reuters.
- Reuters reported on Wednesday, citing unnamed sources, the Bank of Japan will likely trim this year's economic growth forecast and project inflation will stay around its 2% target in coming years at its meeting this month.
- Federal Reserve Chairman Jerome Powell highlighted the urgent need to monitor the deteriorating labor market on Wednesday. Additionally, Powell expressed confidence in the downward trend of inflation, following his remarks on Tuesday that emphasized the necessity of further data to strengthen confidence in the inflation outlook.
- According to a Bloomberg report on Tuesday, the Bank of Japan is conducting three in-person meetings with banks, securities firms, and financial institutions over the next few days. These meetings aim to assess a feasible pace for scaling back its purchases of Japanese Government Bonds.
Technical Analysis: USD/JPY rebounds toward 159.50
USD/JPY trades around 159.30 on Friday. The daily chart analysis shows a weakening bullish bias as it breached the lower boundary of an ascending channel pattern. Additionally, the 14-day Relative Strength Index (RSI) was slightly below the 50 level, indicating a decline in the momentum of the pair's price.
The USD/JPY pair may find initial support near the psychological level of 109.00. A break below this level could reinforce bearish sentiment, potentially prompting a revisit to June's 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 to 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 percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest 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 heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as 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. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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