Japanese yen is struggling to benefit on Thursday recovery from a multi-month low.
Japanese yen (JPY) edged lower versus the US dollar during the Asian session on Friday, halting the previous day’s recovery from its lowest level since July 30. According to data released on Thursday, Japan’s real earnings fell in September, which, combined with rising costs of living, continues to have a negative impact on consumer spending and may impair the outlook for inflation. This is expected to delay the Bank of Japan’s (BoJ) plans for further rate increases despite domestic political uncertainties, and is seen hurting the yen.
Aside from that, a generally favorable risk tone undermines the safe-haven JPY, which, combined with the development of US Dollar (USD) dip-buying, provides support for the USDJPY pairing. However, the recent episode of JPY weakness has provoked some rhetorical intervention by Japanese authorities. Furthermore, the unwinding of the Trump trade and the lack of aggressive signals from the Federal Reserve (Fed) act as a drag on US Treasury bond yields. This could prevent JPY bears from placing aggressive bets and cap the currency pair.
Daily Market update: Japanese yen pushed down by declining likelihood of another BoJ rate hike in 2024.
Government figures released on Friday revealed that Japan’s household spending For the second month in a row, sales declined by 1.3% in September and 1.1% year on year.
This comes on top of a drop in Japan’s inflation-adjusted salaries for the second consecutive month in September, which may impede the Bank of Japan’s efforts to raise interest rates further.
Donald Trump’s triumph in the US presidential election propelled the USDJPY pair beyond 154.00 on Wednesday, prompting rhetorical intervention from authorities.
Yoshimasa Hayashi, Japan’s Chief Cabinet Secretary, reaffirmed that the government intends to closely monitor FX market movements with a higher level of urgency.
Yoshimasa Hayashi, Japan’s Chief Cabinet Secretary, reaffirmed that the government intends to closely monitor FX market movements with a higher level of urgency.
Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and senior foreign exchange official, stated that the government is prepared to take appropriate action against excessive currency movements.
Quarterly statistics from The Ministry of Finance (MOF) said on Friday that Japan spent ¥5.53 trillion on currency intervention from June 27 to July 29.
The US dollar attracted some dip-buying on Friday, reversing a portion of Thursday’s drop from a four-month high and providing some support to the USD/JPY pair.
The Federal Reserve dropped borrowing prices by 25 basis points on Thursday, following a big rate cut in September that began the policy easing cycle.
Fed Chair Jerome Powell did not provide any indications during the post-meeting press conference that the central bank was likely to suspend rate decreases in the near future.
According to the CME Group’s FedWatch Tool, market participants are now pricing 75% odds that the US central The bank will lower interest rates again in December.
Furthermore, traders are continuing to unwind some of the winning Trump trades, which may limit any major rise for the USD and the currency pair.
