- Japanese yen subsequently recovers daily losses Shigeru Ishiba won the party leadership election and became Prime Minister.
- The Tokyo Consumer Price Index rose 2.2% year-on-year in September, slowing from the 2.6% rise in August.
- The US dollar is under downward pressure from dovish Fedspeak.
The Japanese yen (JPY) rose after former Defense Secretary Shigeru Ishiba won the Liberal Democratic Party presidential election and became Prime Minister of Japan. However, the yen faced challenges as traders expected the Bank of Japan to think twice before considering further rate hikes.
The Tokyo Consumer Price Index (CPI) rose 2.2% year-on-year in September, slowing down from the 2.6% rise in August. Meanwhile, the CPI, which excludes fresh food and energy, rose 1.6% year-on-year in September, unchanged from the previous reading. CPI excluding fresh food rose 2.0% as expected, up from 2.4% last time.
The dollar could come under pressure following dovish comments from Fed officials. Traders are expected to closely monitor August U.S. personal consumption expenditures (PCE) price index data, the Fed's preferred inflation measure, on Friday for fresh stimulus. This data is expected to be released later in North American trading.
Daily Digest Market movers: Japanese yen widens losses amid doubts over BOJ's policy outlook
- Federal Reserve Board member Lisa Cook said Thursday she supports last week's 50 basis point (bps) rate cut, citing increased “downside risks” to employment, Reuters reported.
- U.S. gross domestic product (GDP) grew at an annualized rate of 3.0% in the second quarter, in line with previous estimates, the U.S. Bureau of Economic Analysis (BEA) said Thursday. Meanwhile, the GDP price index rose 2.5% in the second quarter.
- According to the US Department of Labor (DoL), 218,000 new claims for unemployment benefits were reported in the US for the week ending September 20th. This number was below the initial consensus of 225,000 and lower than the previous week's revised figure of 222,000 (previously reported as 219,000).
- Minutes of the Bank of Japan's monetary policy meeting on Thursday expressed the consensus of members on the importance of remaining vigilant about the risk of inflation exceeding target. Several members pointed out that raising the interest rate to 0.25% was appropriate as a means of adjusting the level of financial support. Several others suggested that moderate adjustments to financial support would also be appropriate.
- Federal Reserve President Adriana Kugler said Wednesday that she “strongly supports” the Fed's decision to cut interest rates by half a point last week. Kugler also said that if inflation continues to ease as expected, further rate cuts would be appropriate, according to Bloomberg.
- The US Consumer Confidence Index in September was 98.7, down from the revised 105.6 in August. This figure marked the largest decline since August 2021.
- Bank of Japan Governor Kazuo Ueda said on Tuesday the central bank has time to assess market and economic conditions before making policy adjustments, suggesting there is no urgency to raise rates again. Ueda also pointed out that Japan's real interest rates remain significantly negative, which is stimulating the economy and pushing up prices.
Technical analysis: USD/JPY holds position above 145.00, 9-day EMA
USD/JPY was trading around 145.10 on Friday. Analyzing the daily chart, we can see that the pair is moving upwards within an ascending channel and has a bullish bias. Furthermore, the 14-day Relative Strength Index (RSI) remains just above the 50 level, confirming the emergence of a bullish trend.
On the upside, with continued bullish bias, the USD/JPY pair explores an area near the top of the ascending channel at the 146.90 level and then the 147.21 level, the five-week high recorded on September 3rd. There is a possibility.
In terms of support, the USD/JPY pair may test the 9-day exponential moving average (EMA) at the 143.89 level, which coincides with the lower limit of the ascending channel.
USD/JPY: Daily chart
Today's Japanese yen price
The table below shows the percentage change of the Japanese Yen (JPY) against major listed currencies today. The Japanese yen was the strongest against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.28% | 0.25% | -0.96% | 0.16% | 0.28% | 0.34% | 0.08% | |
| EUR | -0.28% | -0.04% | -1.28% | -0.15% | 0.01% | 0.05% | -0.17% | |
| GBP | -0.25% | 0.04% | -1.25% | -0.11% | 0.05% | 0.11% | -0.14% | |
| JPY | 0.96% | 1.28% | 1.25% | 1.18% | 1.32% | 1.36% | 1.14% | |
| CAD | -0.16% | 0.15% | 0.11% | -1.18% | 0.11% | 0.19% | -0.06% | |
| australian dollar | -0.28% | -0.01% | -0.05% | -1.32% | -0.11% | 0.07% | -0.22% | |
| new zealand dollar | -0.34% | -0.05% | -0.11% | -1.36% | -0.19% | -0.07% | -0.24% | |
| swiss franc | -0.08% | 0.17% | 0.14% | -1.14% | 0.06% | 0.22% | 0.24% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Japanese Yen from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box represents JPY (Basic)/USD (Quote).
Frequently asked questions about the Japanese Yen
The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by trends in Japan's economy, but more specifically by factors such as the Bank of Japan's policies, the difference in Japanese and U.S. bond yields, and traders' risk sentiment.
One of the Bank of Japan's duties is exchange control, so its trends are key to the yen. The Bank of Japan occasionally intervenes directly in foreign exchange markets, generally to devalue the yen, but does not do so frequently due to political concerns in major trading partners. The Bank of Japan's current ultra-easy monetary policy, based on large-scale economic stimulus, has caused the yen to weaken against major currencies. This process has recently been exacerbated by increased policy divergence between the Bank of Japan and other major central banks, which have taken significant steps to combat the highest levels of inflation in decades. They are choosing to raise interest rates.
The Bank of Japan's commitment to ultra-accommodative monetary policy has widened its policy divergence from that of other central banks, especially the US Federal Reserve. This confirms the widening gap between US 10-year bonds and Japan's 10-year bonds, favoring the US dollar against the Japanese yen.
The Japanese Yen is often considered a safe investment. This means that when markets are under stress, investors are more likely to put money into the Japanese currency, which is expected to be reliable and stable. Times of turmoil are likely to increase the value of the yen against other currencies that are considered riskier investments.
