- The Japanese yen is rising as the US dollar depreciates ahead of Tuesday’s US election results.
- Yen liquidity is expected to be tight as Japanese markets are closed on Monday for Sports Day.
- The US dollar depreciated following the release of weaker non-farm payrolls data ahead of the Fed’s decision at the end of the week.
The Japanese yen (JPY) gains on Monday as the U.S. dollar (USD) declines, likely as a result of growing uncertainty surrounding Tuesday’s U.S. presidential election. However, JPY liquidity is somewhat constrained due to the closure of Japanese markets for Sports Day, which prevents physical trading of US Treasuries.
The JPY may weaken in the future as political and monetary uncertainty increases following last week’s majority victory for the Liberal Democratic Party (LDP) parliamentary coalition, which caused confusion over the policy direction of the Bank of Japan (BOJ).
Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said on Friday that he expected the Bank of Japan to work closely with the government to implement appropriate monetary policies aimed at achieving the target price in a sustainable and stable manner.
However, BOJ Governor Kazuo Ueda noted in a post-meeting briefing last Thursday that U.S. economic risks appear to be withering, indicating this could pave the way for a potential interest rate hike. Meanwhile, the Bank of Japan decided to keep its key interest rate at 0.25%, a move that was widely expected.
According to the BoJ’s Q3 Outlook report, the central bank plans to continue raising interest rates as long as the economic situation and prices are in line with its forecasts, especially considering that real interest rates are currently very low. The Bank of Japan strives to conduct monetary policy with particular emphasis on the sustained and stable implementation of the inflation target of 2%.
Market overview: The Japanese yen is rising as the US dollar depreciates ahead of the US elections
- Weaker-than-expected nonfarm payrolls (NFP) data for October may have contributed to a weakening US dollar ahead of the Federal Reserve’s (Fed) interest rate decision later this week. According to the CME FedWatch Tool, the probability that the Fed will make a quarter-point rate cut in November is 99.6%.
- The latest poll shows Vice President Kamala Harris has a slight lead in Nevada, North Carolina and Wisconsin, while former President Donald Trump has a slight lead in Arizona. Candidates compete against each other in tight contests in Michigan, Georgia and Pennsylvania. The latest New York Times/Siena College poll conducted from October 24 to November 2 found all matchups in seven battleground states within a 3.5% margin of error.
- U.S. nonfarm payrolls rose by 12,000 in October, following a revised September gain of 223,000 (up from 254,000), well below market expectations of 113,000. Meanwhile, the unemployment rate remained steady at 4 in October. .1%, which was in line with the consensus.
- The au Jibun Bank Japan Manufacturing PMI headline index was 49.2 in October, down from 49.7 in September. This composite single-digit indicator shows that Japanese industrial production continued to decline at the beginning of the fourth quarter of 2024, with both output and fresh order flows falling at a more pronounced pace.
- The U.S. personal consumption expenditure (PCE) price index showed core inflation rose 2.7% year-over-year in September. Additionally, jobless claims fell to a five-month low of 216,000 in the week ending October 25, signaling a solid labor market and lowering expectations of imminent interest rate cuts by the Federal Reserve (Fed).
- Year-over-year U.S. gross domestic product (GDP) grew 2.8% in the third quarter, compared to 3.0% in the second quarter and forecasts of 3.0%. ADP’s Employment Change report showed 233,000 fresh workers added in October, the biggest escalate since July 2023. This followed an upward revision to 159,000 in September and far exceeded forecasts of 115,000.
Technical analysis: USD/JPY is trading below 152.00, the lower boundary of the ascending channel
On Monday, USD/JPY is trading around 151.80. Daily chart analysis suggests a potential weakening in the bullish sentiment as the pair has broken below its ascending channel. However, the 14-day Relative Strength Index (RSI) remains above 50, indicating continued upward momentum.
In terms of resistance, the USD/JPY pair faces an obstacle at the lower boundary of the ascending channel located at 152.90. If the pair manages to re-enter this channel, it could target the recent high of 153.88 before the upper channel boundary near 158.90.
On the other hand, the 14-day exponential moving average (EMA) at 151.60 provides immediate support for the USD/JPY pair, with additional support around the psychological level of 150.00.
USD/JPY: Daily chart
Japanese yen PRICE today
The table below shows the current percentage change of the Japanese Yen (JPY) against the major listed currencies. The Japanese yen was strongest against the British pound.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.55% | -0.43% | -0.03% | -0.03% | -0.43% | -0.05% | -0.28% | |
| EUR | 0.55% | 0.08% | 0.08% | 0.12% | 0.42% | 0.09% | -0.13% | |
| GBP | 0.43% | -0.08% | -0.26% | 0.04% | 0.34% | 0.02% | -0.21% | |
| JPY | 0.03% | -0.08% | 0.26% | 0.00% | 0.16% | 0.19% | 0.07% | |
| BOOR | 0.03% | -0.12% | -0.04% | -0.01% | -0.19% | -0.04% | -0.24% | |
| AUD | 0.43% | -0.42% | -0.34% | -0.16% | 0.19% | -0.32% | -0.55% | |
| NZD | 0.05% | -0.09% | -0.02% | -0.19% | 0.04% | 0.32% | -0.22% | |
| CHF | 0.28% | 0.13% | 0.21% | -0.07% | 0.24% | 0.55% | 0.22% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select 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).
