Japanese Yen could lose ground as US Dollar remains stronger
- The Japanese Yen may continue its losing streak as the US Dollar remains stronger due to the hawkish Fed.
- Japan's Masato Kanda said to intervene in the FX market around the clock if necessary.
- The US Dollar edges higher as Fed officials keep delaying the timing of the first interest rate cut in 2024.
The Japanese Yen (JPY) may continue its losing streak for the eighth consecutive session on Monday. On Friday, a stronger-than-expected US Purchasing Managers Index (PMI) boosted the US Dollar (USD), influencing the USD/JPY pair.
Japan's top currency diplomat, Masato Kanda, stated on Monday that he would take appropriate measures if there were excessive movements in the foreign exchange market. Kanda cautioned against the negative economic effects of such movements and emphasized his readiness to intervene around the clock if necessary, per Reuters.
The US Dollar Index (DXY), meanwhile, which measures the value of the US Dollar (USD) against six major currencies, edges higher due to the Federal Reserve (Fed) officials delaying the timing of the first interest rate cut this year. According to the CME FedWatch Tool, investors are pricing in nearly 65.9% odds of a Fed rate cut in September, compared to 70.2% a week earlier.
Daily Digest Market Movers: Japanese Yen declines due to the hawkish Fed
- BoJ’s Summary of Opinions from its June monetary policy meeting noted that underlying inflation, measured by the consumer price index (CPI), is expected to increase gradually. In the second half of the projection period, it is likely to be at a level that is generally consistent with the price stability target.
- On Friday, the US Composite PMI for June surpassed expectations, rising to 54.6 from May’s reading of 54.5. This figure marked the highest level since April 2022. The Manufacturing PMI increased to a reading of 51.7 from a 51.3 figure, exceeding the forecast of 51.0. Similarly, the Services PMI rose to 55.1 from 54.8 in May, beating the consensus estimate of 53.7.
- Reuters reported that Bank of Japan Deputy Governor Shinichi Uchida stated on Friday that the central bank would "adjust the degree of monetary support" if the economy and prices align with its forecasts. This signals the bank's readiness to raise interest rates further.
- Japan reaffirmed its commitment on Friday to achieve a primary budget surplus by the next fiscal year. This decision reflects concerns that exiting the ultra-low interest rate environment could increase the government's debt burden, according to Reuters.
- As per a Bloomberg report, Fed Bank of Richmond President Tom Barkin said on Thursday that the central bank is well-positioned with the necessary firepower for the job, but will learn a lot more over the next several months. Meanwhile, Fed Bank of Minneapolis President Neel Kashkari noted that it will probably take a year or two to get inflation back to 2%.
Technical Analysis: USD/JPY remains above 159.50
USD/JPY trades around 159.70 on Monday. Analyzing the daily chart shows a bullish bias, with the pair testing the upper boundary of an ascending channel pattern. Moreover, the 14-day Relative Strength Index (RSI) is above the 50 level, suggesting a tendency for upward momentum.
The surpassing of the upper threshold of the ascending channel pattern will reinforce the bullish sentiment and lead the pair to approach he level of 160.32, marked in April as the highest level in over thirty years, which represents a major resistance.
On the downside, the immediate support appears at the nine-day Exponential Moving Average (EMA) at 158.42. A breach below this level could intensify downward pressure on the USD/JPY pair, potentially driving it toward the lower boundary of the ascending channel around the level of 155.60. A break below this level could exert pressure on the pair to test the throwback support around the 152.80 level.
USD/JPY: Daily Chart
Japanese Yen price today
The table below shows the percentage change of the Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.03% | 0.02% | 0.01% | -0.01% | -0.12% | 0.03% | -0.11% | |
| EUR | 0.02% | 0.04% | 0.03% | 0.03% | -0.10% | 0.05% | -0.10% | |
| GBP | -0.02% | -0.03% | -0.01% | 0.00% | -0.14% | 0.02% | -0.13% | |
| CAD | -0.01% | -0.04% | 0.01% | 0.00% | -0.13% | 0.02% | -0.12% | |
| AUD | 0.01% | -0.03% | 0.01% | -0.02% | -0.13% | 0.02% | -0.08% | |
| JPY | 0.13% | 0.12% | 0.13% | 0.15% | 0.13% | 0.17% | 0.03% | |
| NZD | -0.03% | -0.06% | -0.02% | -0.02% | -0.02% | -0.15% | -0.14% | |
| CHF | 0.12% | 0.09% | 0.13% | 0.12% | 0.11% | 0.00% | 0.14% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (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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