USD/JPY revisits almost nine-month high near 154.50 as Japanese Yen underperforms
- USD/JPY jumps to near 154.40 amid weakness in the Japanese Yen.
- Japan’s Aida argued against hiking interest rates by the BoJ in December.
- The US Dollar trades calmly following the advancement of the government bill from the Senate to the House.
The USD/JPY revisits 154.40 during the European trading session on Tuesday, the highest level seen in almost nine months. The pair demonstrates strength as the Japanese Yen (JPY) faces selling pressure amid receding hopes of more interest rate hikes by the Bank of Japan (BoJ) in the near term.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | 0.35% | 0.15% | 0.11% | 0.25% | 0.04% | -0.35% | |
| EUR | 0.08% | 0.43% | 0.23% | 0.19% | 0.33% | 0.14% | -0.26% | |
| GBP | -0.35% | -0.43% | -0.20% | -0.24% | -0.12% | -0.31% | -0.69% | |
| JPY | -0.15% | -0.23% | 0.20% | -0.04% | 0.11% | -0.12% | -0.49% | |
| CAD | -0.11% | -0.19% | 0.24% | 0.04% | 0.15% | -0.07% | -0.45% | |
| AUD | -0.25% | -0.33% | 0.12% | -0.11% | -0.15% | -0.21% | -0.65% | |
| NZD | -0.04% | -0.14% | 0.31% | 0.12% | 0.07% | 0.21% | -0.38% | |
| CHF | 0.35% | 0.26% | 0.69% | 0.49% | 0.45% | 0.65% | 0.38% |
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).
On Monday, Japan’s Takuji Aida, an economic adviser to Prime Minister (PM) Sanae Takaichi, warned that it would be “risky” for the BoJ to “raise interest rates in December". Aida added, “It would be more feasible for the BoJ to raise rates in January, if it can foresee the economy achieving solid growth in fiscal 2026.”
Decelerating hopes of further BoJ rate hikes have weighed on the Japanese Yen.
Financial market participants have already been doubtful over the BoJ tightening the monetary policy further since Sanae Takaichi has been elected as Japan’s PM. She has been observed following former PM Shinzo Abe’s economic principles, which were favorable for higher public spending.
Going forward, investors will focus on the Producer Price Index (PPI) data for October, which will be published on Friday.
Meanwhile, the US Dollar (USD) trades marginally lower, with the US Dollar Index (DXY) ticking down to near 99.55 during the European trading session. The USD Index is broadly sideways after the approval of the government funding bill at the United States (US) Senate, which has now been advanced to the House of Representatives.
Going forward, investors will focus on an array of US economic releases that were halted due to the government shutdown. The economic releases will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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