- The Japanese Yen strengthens a bit in reaction to verbal intervention by Japanese authorities.
- The risk-off impulse further benefits the safe-haven JPY and exerts some pressure on USD/JPY.
- The hotter-than-expected US CPI reaffirms hawkish Fed expectations and favours the USD bulls.
The Japanese Yen (JPY) attracts some buyers during the Asian session on Wednesday after some verbal intervention from the Japanese authorities and recovers a part of the overnight heavy losses against its American counterpart. Apart from this, the risk-off impulse – as depicted by a steep decline across the global equity markets – allows the safe-haven JPY to recover a bit from a three-month low touched the previous day. That said, the recent dovish remarks by the Bank of Japan (BoJ) Deputy Governor Shinichi Uchida might hold back bulls from placing aggressive bets. Apart from this, a strong bullish tone around the US Dollar (USD) might also contribute to limiting the downside for the USD/JPY pair.
The stronger-than-expected US consumer inflation data released on Tuesday reaffirmed market expectations that the Federal Reserve (Fed) will keep interest rates higher for longer. This, in turn, remains supportive of elevated US Treasury bond yields and assists the USD Index (DXY), which tracks the Greenback against a basket of currencies, to stand tall near its highest level since November 14. Furthermore, the widening of the US-Japan rate differential might hold back traders from placing bullish bets around the JPY, suggesting that the path of least resistance for the USD/JPY pair is to the upside.
- The Japanese Yen trims a part of Tuesday’s post-US CPI fall to a three-month low after Japan’s top currency diplomat Masato Kanda reiterated that authorities stand ready to take steps in the FX market if needed.
- Furthermore, Japan’s Finance Minister Shunichi Suzuki said that rapid FX moves are undesirable and that the government is watching the market with even stronger urgency, though made no comments on intervention.
- A hotter-than-expected US inflation report cooled expectations for a more aggressive rate-cutting cycle by the Federal Reserve, pushing US Treasury bond yields higher and tempering investors’ appetite for riskier assets.
- The Labor Department’s Bureau of Labor Statistics reported on Tuesday that the headline US CPI rose by 0.3% in January as compared to the 0.2% previous and softened to the 3.1% YoY rate from the 3.4% in December.
- The reading was above market expectations for a reading of 2.9% and was accompanied by stronger Core CPI print, which rose 3.9% during the reported month, matching December’s increase and surpassing estimates for 3.7%.
- Investors have all but priced out a March rate cut and the possibility for a move in May has declined to around 35% from over 60% the previous day, while the Fed is now expected to start cutting rates at the June policy meeting.
- The yield on the benchmark 10-year US government bond reached its highest level since December 1 and lifted the US Dollar to a three-month peak, supporting prospects for a further appreciating move for the USD/JPY pair.
From a technical perspective, the overnight strong move-up was seen as a fresh trigger for bulls and might have already set the stage for additional gains. That said, the Relative Strength Index (RSI) on the daily chart is hovering close to the overbought zone and warrants some caution. Any further corrective slide, however, is likely to attract fresh buyers near the 150.30 area, which should limit losses for the USD/JPY pair near the 150.00 mark. The latter should act as a key pivotal point, which if broken might prompt some technical selling and drag spot prices further towards the 149.65-149.60 region.
On the flip side, the 150.90 area, or a multi-month peak touched on Tuesday, now seems to act as an immediate hurdle. A sustained strength beyond could lift the USD/JPY pair further towards the 151.45 intermediate hurdle en route to the 152.00 neighbourhood, or a multi-decade peak set in October 2022 and retested in November 2023.
Japanese Yen price today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.03% | 0.02% | 0.01% | -0.02% | -0.08% | -0.03% | -0.02% | |
| EUR | -0.01% | 0.00% | 0.00% | -0.03% | -0.10% | -0.02% | -0.03% | |
| GBP | -0.02% | 0.00% | 0.00% | -0.02% | -0.09% | -0.04% | -0.03% | |
| CAD | -0.01% | 0.00% | 0.00% | -0.03% | -0.09% | -0.04% | -0.04% | |
| AUD | 0.00% | 0.03% | 0.03% | 0.03% | -0.07% | -0.01% | -0.01% | |
| JPY | 0.08% | 0.08% | 0.08% | 0.10% | 0.05% | 0.07% | 0.05% | |
| NZD | 0.03% | 0.04% | 0.04% | 0.04% | 0.04% | -0.05% | 0.02% | |
| CHF | 0.02% | 0.04% | 0.04% | 0.04% | 0.04% | -0.05% | 0.02% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
