The Japanese Yen (JPY) remains stable following the release of the latest inflation data on Friday. Japan’s National Consumer Price Index (CPI) for June held steady at 2.8%, matching the previous month’s figure and remaining at the highest level since February. Meanwhile, Core CPI inflation rose to 2.6%, slightly above the previous reading of 2.5% but just below the consensus estimate of 2.7%. Japan’s 10-year government bond yield trades at approximately 1.04%, recovering from three-week lows. This rebound follows Digital Minister Kono Taro’s statement to Bloomberg that the Bank of Japan (BoJ) should raise interest rates again in July to support the Yen. Additionally, the BoJ is anticipated to show its bond purchase tapering plans this month.
The USD/JPY pair has retreated by as much as 4% from a 38-year high of 161.95 during July. Analysts attribute this decline to interventions by Japanese authorities. Traders remain vigilant about the possibility of further interventions. The US Dollar receives support from an improvement in US Treasury yields. However, the greenback may limit its upside as soft labor data bolster market expectations of a September rate-cut decision by the Federal Reserve (Fed).
Japan’s National Consumer Price Index (CPI) for June held steady at 2.8%, matching the previous month’s figure and remaining at the highest level since February. Core CPI inflation rose to 2.6%, slightly above the previous reading of 2.5% but just below the consensus estimate of 2.7%. Japan’s 10-year government bond yield trades at approximately 1.04%, recovering from three-week lows. This rebound follows Digital Minister Kono Taro’s statement to Bloomberg that the Bank of Japan (BoJ) should raise interest rates again in July to support the Yen. Additionally, the BoJ is anticipated to show its bond purchase tapering plans this month. The USD/JPY pair has retreated by as much as 4% from a 38-year high of 161.95 during July, with analysts attributing this decline to interventions by Japanese authorities. Traders remain vigilant about the possibility of further interventions.
The US Dollar receives support from an improvement in US Treasury yields, but may limit its upside as soft labor data bolster market expectations of a September rate-cut decision by the Federal Reserve (Fed). Daily Digest Market Movers reveals that the Japanese Yen remains stable amid an intervention threat. Japan’s CPI inflation, excluding both food and energy prices, ticks higher in June to a 2.2% year-over-year rate from the previous 2.1%. US Initial Jobless Claims increased more than expected, with data showing 243K new unemployment benefits seekers for the week ended July 12, above the expected 230K and higher than the previous week’s revised 223K. On Wednesday, Fed Governor Christopher Waller indicated that the US central bank is ‘getting closer’ to an interest rate cut, while Richmond Fed President Thomas Barkin stated that easing in inflation had started to broaden and he would like to see it continue.
In another development, Reuters cited Kyodo News, reporting that Japan’s top currency diplomat Masato Kanda said on Wednesday he would have to respond if speculators cause “excessive” moves in the currency market and that there was no limit to how often authorities could intervene. During an interview with Bloomberg News, Donald Trump cautioned Fed Chair Jerome Powell against cutting US interest rates before November’s presidential vote. However, Trump also suggested that if re-elected, he would allow Powell to complete his term if he continued to “do the right thing” at the Federal Reserve. Additionally, data released on Tuesday showed that the Bank of Japan (BoJ) intervened in the foreign exchange market on consecutive trading days last Thursday and Friday, with the current account balance data from the BoJ indicating an anticipated liquidity drain of approximately ¥2.74 trillion ($17.3 billion) from the financial system, according to Nikkei Asia. Fed Chair Jerome Powell commented earlier this week that the US inflation readings of this year added to confidence that inflation is on course to meet the Fed’s target sustainably, hinting that a shift to interest rate cuts may not be far off.
Technical analysis of the USD/JPY pair suggests that it is trading around 157.40 on Friday. The daily chart analysis indicates that the pair is below its 9-day Exponential Moving Average (EMA), suggesting short-term downward momentum. The 14-day Relative Strength Index (RSI) is below 50, confirming a bearish bias. Key support for the pair is around June’s low of 154.55, with a break below potentially pushing it towards May’s low of 151.86. On the upside, immediate resistance is noted around the 9-day EMA at 158.25, and a break above this level could see the pair revisiting the pullback resistance around the psychological level of 162.00.
In terms of the Japanese Yen’s performance today, the table shows the percentage change of the JPY against listed major currencies. The Japanese Yen was the weakest against the Canadian Dollar. The heat map displayed indicates the percentage changes of major currencies against each other, with the base currency picked from the left column and the quote currency from the top row. The Japanese Yen showed various percentage changes against different major currencies, highlighting its performance in the forex market.
