The USD/JPY pair extends the previous day’s overdue pullback from near the mid-162.00 level and attracts several more sellers during Tuesday’s Asian session. Spot prices fell to a range of 161.70-161.65 in the last hour, although the decline remains tempered in the absence of any intervention by Japanese authorities and a supportive fundamental environment.
Reports last week suggested that Japanese officials were abandoning their customary habit of telegraphing the risks of intervention and beginning to focus on attacking speculators. However, the immediate market reaction appears to have weakened as no action has yet been taken. Moreover, the huge difference in borrowing costs between Japan and other major economies, including the US, keeps the so-called carry trade and continues to weaken the Japanese yen (JPY) amid economic risks arising from tensions in the Middle East.
In fact, the maritime agency reported that the tanker was hit by an unidentified missile while transiting the critical Strait of Hormuz. This adds to a dispute between the US and Iran over the idea of ​​Iran imposing fees on ships to apply the strait and increases concerns that the Japanese economy will remain burdened by ongoing energy disruptions. Moreover, concerns about the durability of the feeble U.S.-Iran peace agreement support the status of the US dollar (USD) as a relative safe and sound haven and support the USD/JPY pair.
On economic data, nominal wages – or total cash earnings – in Japan rose 3.2% in May, slightly slower than the revised 3.6% growth in the previous month. Meanwhile, real wages rose 1.4% from a year earlier, marking the fifth straight month of increases, although the pace of growth has slowed amid a “reacceleration in consumer inflation.” Moreover, household spending in Japan fell for the sixth consecutive month in May, by 0.4% y/y. This may complicate the BOJ’s policy tightening path and argues for further depreciation of the yen.
Meanwhile, reduced bets on interest rate increases by the United States Federal Reserve (Fed) are weighing negatively on the USD and could halt any significant rally in the USD/JPY pair. Nevertheless, the fundamental situation mentioned above suggests that any corrective pullback may still be viewed as a buying opportunity and will remain circumscribed. Therefore, it may be prudent to wait for a mighty further sell-off before confirming that spot prices have reached a near-term high as investors now look to Wednesday’s FOMC minutes.
Today’s Japanese Yen price
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 Canadian dollar.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.04% | -0.16% | 0.04% | -0.04% | -0.07% | -0.01% | |
| EUR | 0.03% | -0.03% | -0.15% | 0.05% | 0.00% | -0.03% | 0.01% | |
| GBP | 0.04% | 0.03% | -0.11% | 0.09% | 0.04% | -0.00% | 0.05% | |
| JPY | 0.16% | 0.15% | 0.11% | 0.20% | 0.13% | 0.09% | 0.15% | |
| BOOR | -0.04% | -0.05% | -0.09% | -0.20% | -0.08% | -0.09% | -0.05% | |
| AUD | 0.04% | -0.00% | -0.04% | -0.13% | 0.08% | -0.04% | 0.02% | |
| NZD | 0.07% | 0.03% | 0.00% | -0.09% | 0.09% | 0.04% | 0.05% | |
| CHF | 0.00% | -0.01% | -0.05% | -0.15% | 0.05% | -0.02% | -0.05% |
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).
