- The Japanese yen is falling while the US dollar is rising following the failed assassination attempt on former US President Donald Trump.
- The JPY exchange rate may be volatile amid speculation about potential intervention by Japanese authorities.
- Japanese authorities are estimated to have spent between 3.37 trillion and 3.57 trillion yen to stem the yen’s piercing decline.
The Japanese yen (JPY) is falling on Monday as the U.S. dollar (USD) strengthens amid rising risk aversion sparked by the assassination attempt on former U.S. President Donald Trump on Saturday. Analysts are speculating that if the event boosts Trump’s chances in the upcoming election, it could trigger “Trump victory trades,” potentially strengthening the U.S. dollar and steepening the U.S. Treasury yield curve, according to a Reuters report.
The Japanese yen (JPY) could face potential volatility amid speculation about intervention by Japanese authorities. Data released by the Bank of Japan (BoJ) on Friday estimates that Japanese authorities may have spent between ¥3.37 trillion and ¥3.57 trillion on Thursday to stem the rapid depreciation of the JPY, Reuters reported.
The Japanese yen’s rally, which has been hovering near 38-year lows, began Thursday as the U.S. dollar (USD) weakened after data showed U.S. consumer prices moderated in June. The development raised expectations that the Federal Reserve could cut interest rates as early as September.
According to CME Group’s FedWatch tool, markets now indicate an 88.1% probability of a 25 basis point rate cut at the Federal Reserve’s September meeting, up from 72.2% a week ago.
Daily Market Update: Japanese Yen May Experience Volatility on Intervention Threats
- ING currency analyst Francesco Pesole notes that the Japanese Ministry of Finance has adjusted its currency intervention strategy. Following a tender US CPI reading on Friday, the USD/JPY pair fell by around 2%, a larger decline compared to other USD pairs. The enhance in JPY futures volumes seems to be in line with signs of currency intervention.
- UBS FX strategists note that speculative investors are maintaining near-record low positions in the yen. They suggest that if US economic data continues to point to a pliable landing, USD/JPY could experience periods of pullbacks.
- BBH FX strategists point out that recent weakness in US data challenges their outlook, with the backdrop of sustained inflation and powerful US growth largely intact. They note growing concerns from Federal Reserve officials about labor market weakness.
- Japanese Chief Cabinet Secretary Yoshimasa Hayashi said he was ready to apply all available measures regarding the currency market. Hayashi noted that the Bank of Japan (BoJ) will determine the specifics of monetary policy. He expects the BoJ to implement appropriate measures to achieve the 2% price target in a sustainable and steady manner, Reuters reported on Friday.
- Japanese Finance Minister Shunichi Suzuki on Friday stressed that wild fluctuations in foreign exchange (FX) rates were undesirable. Suzuki refrained from commenting on FX intervention and declined to address media reports about Japan’s exchange rate controls, Reuters reported.
- Data on Thursday showed the U.S. Consumer Price Index (CPI), which excludes volatile food and energy prices, rose 3.3% year over year in June, compared with a 3.4% rise in May and the same expectation. Meanwhile, the core CPI rose 0.1% month over month, compared with the expected and previous reading of 0.2%.
- Federal Reserve Chairman Jerome Powell on Wednesday stressed the urgent need to monitor the deteriorating labor market. Powell also expressed confidence in the downward trend in inflation, following remarks Tuesday in which he stressed the need for further data to bolster confidence in the inflation outlook.
Technical Analysis: USD/JPY Maintains Position Around 158.00
USD/JPY is trading around 158.00 on Monday. Daily chart analysis indicates a weakening of the uptrend as the pair has broken below the lower boundary of the ascending channel pattern. Furthermore, the 14-day Relative Strength Index (RSI) is below the 50 level, which signals a decline in the pair’s momentum.
Further downside could put downward pressure on USD/JPY, potentially testing support near the June low at 154.55.
On the other hand, immediate resistance is seen around the 14-day exponential moving average (EMA) at 159.75 and then the lower boundary of the ascending channel at 160.20. A return to trading within the ascending channel would likely improve sentiment for the USD/JPY pair, with a potential target near the upper boundary of the ascending channel near 163.50.
USD/JPY: Daily Chart
Japanese Yen Exchange Rate Today
The table below shows the percentage change in the Japanese Yen (JPY) against the major currencies today. The Japanese Yen was the weakest against the British Pound.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.12% | 0.08% | -0.16% | 0.08% | 0.12% | 0.10% | 0.13% | |
| EUR | -0.12% | -0.00% | -0.09% | 0.15% | 0.04% | 0.17% | 0.20% | |
| GBP | -0.08% | 0.00% | 0.02% | 0.16% | 0.04% | 0.13% | 0.18% | |
| JPY | 0.16% | 0.09% | -0.02% | 0.24% | 0.06% | 0.22% | 0.07% | |
| BOOR | -0.08% | -0.15% | -0.16% | -0.24% | -0.03% | 0.02% | 0.01% | |
| AUD | -0.12% | -0.04% | -0.04% | -0.06% | 0.03% | 0.14% | 0.13% | |
| NZD | -0.10% | -0.17% | -0.13% | -0.22% | -0.02% | -0.14% | -0.01% | |
| CHF | -0.13% | -0.20% | -0.18% | -0.07% | -0.01% | -0.13% | 0.00% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you select the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Economic indicator
Total goods trade balance
The total trade balance published by Ministry of Finance is a measure of the balance between imports and exports. A positive value indicates a trade surplus, while a negative value indicates a trade deficit. Japan is so dependent on exports that the Japanese economy relies heavily on a trade surplus. Therefore, any fluctuations in the numbers affect the domestic economy. If there is a steady demand in exchange for Japanese exports, then it turns into a positive value.
