USD/JPY gains to near 159.00 after natural calamities in Japan
- USD/JPY rises to near 159.00 as the Japanese Yen extends its weakness.
- A 7.3 magnitude earthquake and a tsunami hit the off Japan coast.
- The uncertainty over the resumption of the US-Iran peace talks has improved the US Dollar’s safe-haven appeal.
The USD/JPY pair trades 0.25% higher to near 159.00 during the European trading session on Monday. The pair gains as the Japanese Yen (JPY) extends underperformance, following natural disasters in Japan.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | 0.12% | 0.22% | -0.02% | 0.26% | 0.18% | 0.04% | |
| EUR | -0.01% | 0.11% | 0.17% | -0.05% | 0.25% | 0.18% | 0.00% | |
| GBP | -0.12% | -0.11% | 0.06% | -0.14% | 0.14% | 0.07% | -0.11% | |
| JPY | -0.22% | -0.17% | -0.06% | -0.19% | 0.08% | -0.04% | -0.17% | |
| CAD | 0.02% | 0.05% | 0.14% | 0.19% | 0.27% | 0.16% | 0.02% | |
| AUD | -0.26% | -0.25% | -0.14% | -0.08% | -0.27% | -0.08% | -0.24% | |
| NZD | -0.18% | -0.18% | -0.07% | 0.04% | -0.16% | 0.08% | -0.16% | |
| CHF | -0.04% | -0.01% | 0.11% | 0.17% | -0.02% | 0.24% | 0.16% |
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).
During the day, there has been an earthquake off the east coast of Honshu, Japan, with a 73 magnitude. However, a spokesperson from Hokkaido Electric Power confirms that there has been no abnormality at the Tomari nuclear power plant after the quake. However, a spokesperson from Hokkaido Electric confirms that there has been no abnormality at Tomari nuclear power plant after quake. Also, the NHK announced that a tsunami has been observed off the Japanese coast.
The Japanese Yen was already underperforming earlier in the day amid growing doubts over the Bank of Japan (BoJ) raising interest rates in its monetary policy meeting on April 28. Investors expect the BoJ to avoid any monetary policy adjustment as a negative energy shock has raised concerns over Japan’s economic outlook.
Meanwhile, the US Dollar (USD) trades firmly as its safe-haven demand has improved amid Iran’s refusal to conduct another round of negotiation talks with the US. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 98.30.
Iran's foreign ministry spokesperson Esmail Baghaei said during the day that there is “no plan for a second round of negotiations with the United States (US) for now. Also, a senior Iranian source stated that the “continuation of US blockade on Iranian ships undermines the US-Iran peace talks”.
On the domestic front, investors await the confirmation hearing of US President Donald Trump’s nominee, Kevin Warsh, as the Federal Reserve’s (Fed) new Chairman before the Senate Banking Committee on Tuesday. Investors will pay close attention to Warsh’s comments regarding the monetary policy outlook in the wake of de-anchored inflation expectations amid higher oil prices.
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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