- Japanese Yen rises as government allocates ¥989 billion to fund energy subsidies.
- The JPY faced challenges as weak Japanese manufacturing data fueled speculation that the BoJ could postpone further rate hikes.
- The US Dollar is supported by improving Treasury yields.
The Japanese Yen (JPY) ended its four-day losing streak, rising against the US Dollar (USD) on Tuesday. However, the JPY encountered hurdles as weak Japanese manufacturing data fueled speculation that the Bank of Japan (BoJ) may postpone further rate hikes.
Japan will allocate ¥989 billion to fund energy subsidies in response to rising energy costs and resulting pressures on the cost of living. This government intervention could potentially contribute to inflation. The Bank of Japan’s (BoJ) hawkish monetary policy stance has been reinforced by a recent surge in inflation in Tokyo. Meanwhile, Japanese companies reported a sharp increase in capital spending for the second quarter.
The downside for the USD/JPY pair could be limited as the US Dollar strengthens amid improving Treasury yields. Traders will focus on the upcoming US employment data, particularly the Non-Farm Payrolls (NFP) for August, for further insight into the possible timing and scale of the Fed’s rate cuts.
Daily Market Wrap: Japanese Yen Rises on BoJ’s Hardline Stance
- The U.S. Bureau of Economic Analysis reported on Friday that the headline Personal Consumption Price Index (PCE) rose 2.5% year-over-year in July, matching the previous reading of 2.5% but below the 2.6% estimate. Meanwhile, the core PCE, which excludes volatile food and energy prices, rose 2.6% year-over-year in July, consistent with the previous figure of 2.6% but slightly below the consensus forecast of 2.7%.
- Tokyo’s Consumer Price Index (CPI) rose to 2.6% year-on-year in August, up from 2.2% in July. Core CPI also rose to 1.6% year-on-year in August, compared with 1.5% previously. In addition, Japan’s Unemployment Rate unexpectedly rose to 2.7% in July, versus the market estimate and 2.5% in June, marking the highest unemployment rate since August 2023.
- Federal Reserve Bank of Atlanta President Raphael Bostic, a prominent hawk on the FOMC, indicated last week that it may be “time to act” on rate cuts due to a further slowdown in inflation and a higher-than-expected unemployment rate. FXStreet’s FedTracker, which measures the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Bostic’s words as neutral with a score of 5.6.
- U.S. Gross Domestic Product (GDP) grew at an annualized rate of 3.0% in the second quarter, exceeding both the expected and prior growth rate of 2.8%. In addition, Initial Jobless Claims showed that the number of people applying for unemployment benefits fell to 231,000 for the week ending August 23, down from 233,000 previously and slightly below the 232,000 expected.
- Japanese Finance Minister Shunichi Suzuki said last week that exchange rates are influenced by a variety of factors, including monetary policies, interest rate differentials, geopolitical risks and market sentiment. Suzuki added that it is difficult to predict how these factors will impact exchange rates.
Technical Analysis: USD/JPY tests the 21-day EMA resistance near 147.00
USD/JPY is trading around 146.70 on Tuesday. The daily chart analysis shows that the nine-day exponential moving average (EMA) is below the 21-day EMA, which indicates a bearish bias in the market. Additionally, the 14-day Relative Strength Index (RSI) remains below 50, which indicates that the bearish trend is still in effect.
In terms of support, the USD/JPY pair could first test the nine-day exponential moving average (EMA) around 145.91. If the pair falls below this level, it could move towards the seven-month low of 141.69, recorded on August 5, and subsequently find the next support level around 140.25.
On the upside, the USD/JPY pair could test the immediate barrier at the 21-day EMA at 146.97. A break above this level could support the pair to approach the psychological level of 150.00, followed by the 154.50 level, which has turned from support to resistance.
USD/JPY: Daily Chart
Japanese Yen PRICE Today
The table below shows the Japanese Yen (JPY) exchange rate against major currencies today. The Japanese Yen was the strongest currency against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.07% | -0.22% | 0.12% | 0.34% | 0.37% | 0.13% | |
| EUR | -0.05% | 0.00% | -0.24% | 0.06% | 0.27% | 0.22% | 0.06% | |
| GBP | -0.07% | -0.01% | -0.25% | 0.06% | 0.26% | 0.22% | 0.07% | |
| JPY | 0.22% | 0.24% | 0.25% | 0.32% | 0.52% | 0.38% | 0.31% | |
| CAD | -0.12% | -0.06% | -0.06% | -0.32% | 0.19% | 0.06% | 0.00% | |
| AUD | -0.34% | -0.27% | -0.26% | -0.52% | -0.19% | -0.16% | -0.20% | |
| NZD | -0.37% | -0.22% | -0.22% | -0.38% | -0.06% | 0.16% | -0.04% | |
| CHF | -0.13% | -0.06% | -0.07% | -0.31% | -0.01% | 0.20% | 0.04% |
The heatmap shows percentage changes of major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the chart will represent the JPY (base)/USD (quote).
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by the performance of the Japanese economy, but more specifically by the policy of the Bank of Japan, the spread between Japanese and US bond yields, and risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key to the Yen. The BoJ has intervened directly in currency markets on occasion, usually to lower the value of the Yen, although it often refrains from doing so due to political concerns of its major trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its major currency peers. This process has been exacerbated more recently by a growing policy divergence between the BoJ and other major central banks, which have opted to sharply raise interest rates to combat decades-old levels of inflation.
The Bank of Japan’s stance of maintaining an ultra-loose monetary policy has led to an increase in policy divergence with other central banks, in particular with the US Federal Reserve. This favours the widening of the spread between US and Japanese 10-year bonds, which favours the Dollar against the Yen.
The Japanese Yen is often considered a safe haven investment. This means that in times of market stress, investors are more likely to put their money into the Japanese currency due to its perceived reliability and stability. In turbulent times, the Yen is likely to appreciate against other currencies that are considered riskier to invest in.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
