USD/JPY holds above 159.00, traders are on high alert for more intervention
-
USD/JPY
gains
ground
around
159.10
in
Friday’s
early
Asian
session,
up
0.19%
on
the
day. -
Traders
raised
their
bets
on
Fed
rate
cuts
in
September
after
the
softer
US
June
CPI
inflation. -
Further
possible
FX
intervention
from
Japanese
authorities
might
support
the
JPY
and
cap
the
pair’s
upside.
The
USD/JPY
pair
holds
positive
ground
near
159.10
after
bouncing
off
a
nearly
three-week
low
of
157.41
during
the
early
Asian
trading
hours
on
Friday.
The
upside
for
the
pair
might
be
limited
amid
the
fear
of
further
foreign
exchange
(FX)
intervention
by
Japanese
officials.
Traders
will
monitor
the
US
June
Producer
Price
Index
(PPI)
and
the
preliminary
July
Michigan
Consumer
Sentiment
gauge,
which
are
due
later
on
Friday.
The lowest
Consumer
Price
Index
(CPI)
reading in
more
than
three
years
has
triggered
the
possibility
that
the
Federal
Reserve
(Fed)
would
lower
rates
starting
in
September.
The
US
CPI
inflation
was
softer
than
expected
in
June,
with
annualized
headline
CPI
inflation
easing
to
3.0%
YoY
from
the
previous
reading
of
3.3%.
Meanwhile,
the
monthly
CPI
inflation
dropped
0.1%
MoM
in
June
from
last
month’s
flat
0.0%
and
below
the
market
consensus
of
0.1%.
Fed
Chair
Jerome
Powell
acknowledged
the
progress
on
price
pressures,
but
he
was
not
yet
ready
to
declare
inflation.
However,
Powell
added
that
“more
good
data”
would
open
the
door
for
rate
cuts.
Financial
markets
saw
a
nearly
85%
odds
of
a
Fed
rate
cut
in
September,
up
from
the
70%
chance
seen
before
the
CPI
report.
Two
rate
cuts
are
anticipated
this
year.
The
Japanese
Yen
(JPY)
gained
traction
in
the
previous
session
amid
speculation
that
Japanese
authorities
might
step
into
the
FX
market
to
support
its
currency.
Early
Friday,
Japan’s top
currency
diplomat,
Masato
Kanda,
stated
that the
recent
move
of
the
JPY
is
somewhat
rapid
and
he
will
take
appropriate
measures
on
FX
if
needed. The
further
possible
intervention
from
officials
is
likely
to
support
the
JPY
and
act
as
a
headwind
for
USD/JPY
for
the
time
being.
Japanese
Yen
FAQs
The
Japanese
Yen
(JPY)
is
one
of
the
world’s
most
traded
currencies.
Its
value
is
broadly
determined
by
the
performance
of
the
Japanese
economy,
but
more
specifically
by
the
Bank
of
Japan’s
policy,
the
differential
between
Japanese
and
US
bond
yields,
or
risk
sentiment
among
traders,
among
other
factors.
One
of
the
Bank
of
Japan’s
mandates
is
currency
control,
so
its
moves
are
key
for
the
Yen.
The
BoJ
has
directly
intervened
in
currency
markets
sometimes,
generally
to
lower
the
value
of
the
Yen,
although
it
refrains
from
doing
it
often
due
to
political
concerns
of
its
main
trading
partners.
The
current
BoJ
ultra-loose
monetary
policy,
based
on
massive
stimulus
to
the
economy,
has
caused
the
Yen
to
depreciate
against
its
main
currency
peers.
This
process
has
exacerbated
more
recently
due
to
an
increasing
policy
divergence
between
the
Bank
of
Japan
and
other
main
central
banks,
which
have
opted
to
increase
interest
rates
sharply
to
fight
decades-high
levels
of
inflation.
The
BoJ’s
stance
of
sticking
to
ultra-loose
monetary
policy
has
led
to
a
widening
policy
divergence
with
other
central
banks,
particularly
with
the
US
Federal
Reserve.
This
supports
a
widening
of
the
differential
between
the
10-year
US
and
Japanese
bonds,
which
favors
the
US
Dollar
against
the
Japanese
Yen.
The
Japanese
Yen
is
often
seen
as
a
safe-haven
investment.
This
means
that
in
times
of
market
stress,
investors
are
more
likely
to
put
their
money
in
the
Japanese
currency
due
to
its
supposed
reliability
and
stability.
Turbulent
times
are
likely
to
strengthen
the
Yen’s
value
against
other
currencies
seen
as
more
risky
to
invest
in.
Leave a Reply