Japanese yen decline could be limited as markets remain wary of anticipated government intervention.
The Japanese yen (JPY) extended its losses on Tuesday, with traders staying cautious after the currency soared by about 2% last week. Following a suspected intervention by Japanese officials. The Bank of Japan (BoJ) release data on Friday, estimating. That Japanese authorities may have spent between ¥3.37 trillion to ¥3.57 trillion on Thursday to prevent rapid devaluation Reuters reported on the JPY.
Fed Chair Jerome Powell stated that inflation is on track to fulfill the Fed’s target on a sustained basis.
The US Dollar (USD) gains amid increased risk aversion. Following the attempted assassination of former US President Donald Trump on Saturday. However, falling US inflation has boosted expectations for a Federal Reserve rate decrease in September, potentially limiting the Greenback’s upside. Investors will most likely look to the US June Retail Sales data. Which will be issued later today, for additional insights.
According to CME Group’s FedWatch Tool, the chance of a 25-basis-point rate drop at the September Fed meeting has risen from 71.0% a week ago.
Daily Market Movers: Japanese Yen falls amid intervention warnings.
Fed Chairman Jerome Powell said on Monday. That the three US inflation readings of This year “adds somewhat to confidence” that inflation will meet the Fed’s target on a sustained basis, implying that a shift to interest rate decreases is not far off.
According to Fed Bank of San Francisco President Mary Daly. Inflation is slowing, which increases confidence that it will reach 2%. However, Daly noted that additional information is required before reaching a rate decision.
US President Joe Biden addressed the nation from the White House on Monday. Condemning all forms of political violence and calling for togetherness, according to CNBC. Biden said that “it’s time to cool it down” and mentioned not only the weekend attack on Trump. But also the danger of election-year violence on numerous fronts. Francesco Pesole, an FX analyst at ING, notes that Japan’s Ministry of Finance has changed its foreign exchange intervention policy. Following the soft US CPI reading on Friday, the Japanese yen pair fell about 2%, a greater decrease than other USD pairs. The spike in JPY futures volumes appears to be consistent with signs of FX intervention.
UBS FX strategists note that speculative investors have near-record short positions in the yen.
UBS FX strategists note that speculative investors have near-record short positions in the yen. They think that if US economic data continues to point to a gentle landing, Japanese yen may face some pullbacks.
BBH FX analysts point out that recent softness in US data calls into question their view that the background of sustained inflation and solid growth in the US remains substantially intact. They observe growing worry among Federal Reserve officials relating There are vulnerabilities in the labor market.
Yoshimasa Hayashi, the Japanese Chief Cabinet Secretary, declared that he is prepared to use all forex-related actions. Hayashi stated that the Bank of Japan (BoJ) will determine the specifics of monetary policy. He expects the BoJ to take adequate measures to attain the 2% price objective in a sustainable and consistent manner, as reported by Reuters on Friday.
Shunichi Suzuki, Japan’s Finance Minister, highlighted Friday that fast foreign exchange (FX) movements are undesirable. Suzuki declined to comment on FX intervention and media claims of Japan’s FX rate checks, as reported by Reuters.
