The USD/JPY pair has seen an uptick in Monday’s Asian trading session after a three-day losing streak. This rise can be attributed to the slight recovery of the US Dollar and comments made by US Treasury Secretary Janet Yellen regarding potential Japanese interventions in the currency market. Currently trading around 153.55, the pair has gained 0.35% for the day. Yellen acknowledged the sharp movements in the Japanese Yen’s value last week but refrained from confirming whether Japan indeed intervened to support its currency. She emphasized that interventions should focus on reducing market volatility rather than manipulating currency rates, aligning with a Group of Seven agreement on market-determined rates.
Speculation that the US Federal Reserve may cut interest rates in September following weaker-than-expected employment data has put pressure on the US Dollar. Traders are now pricing in an 85.5% chance of no change to the Fed fund rate in June, with the likelihood of a September rate cut increasing to 90%. The latest US employment report showed signs of economic slowdown, with the Nonfarm Payrolls increasing by 175K in April, falling short of the estimated 243K and marking the lowest increase since October 2023. The Unemployment Rate rose to 3.9% in April, while Average Hourly Earnings fell by 3.9% year on year. Additionally, the US ISM Services PMI dropped from 51.4 in March to 49.4 in April, below the expected 52.0, signaling contractionary growth.
As the US Dollar gains ground against the Japanese Yen, investors are closely monitoring the potential impacts of Japanese currency interventions and the Fed’s monetary policy decisions. Yellen’s comments on market-determined currency rates and the need to reduce volatility rather than manipulate rates have contributed to the cautious approach in the currency market. With expectations of a September rate cut by the Fed, the USD/JPY pair faces uncertainties in the near term. Traders will be closely watching economic data releases and central bank statements for further insights into the currency market trends.
Overall, the USD/JPY pair is experiencing a period of volatility amid changing economic conditions and central bank policies. The recent uptick in the pair can be attributed to the rebound of the US Dollar and Yellen’s comments on potential Japanese interventions in the currency market. With the US employment data showing signs of a slowing economy, the Fed’s decision on interest rates remains a key factor influencing the currency market. As investors assess the impact of these developments, the USD/JPY pair is likely to continue experiencing fluctuations in the coming days. Traders will need to stay informed about economic indicators and central bank actions to make informed decisions in the volatile currency market.
