In the New York FX market, USD/JPY is trading in the mid-¥158 range. While the dollar’s decline is continuing, yen weakness also remains entrenched, and cross-yen pairs moved higher.
In today’s New York FX market, USD/JPY traded in the mid-¥158 range. Although the dollar’s decline from the previous day continued, yen weakness also remained entrenched, keeping USD/JPY firm. Cross-yen pairs such as EUR/JPY and GBP/JPY continued to move higher.
There is a view that the previous day’s announcement by the US Treasury of measures to curb yields is having an impact, and USD/JPY’s upside momentum was seen weakening at times. The immediate focus is whether the pair can remain above its 200-day moving average.
Some have pointed to the divergence in Japan-US interest rate outlooks as working in the yen’s favor, while views are also mixed that expectations for BOJ rate hikes are strengthening as expectations for Fed rate hikes recede. The six-month Japan-US interest rate differential is trending narrower.
There is also a view that a full-scale unwind in USD/JPY will be influenced by factors such as the situation in the Middle East, energy prices and a cooling in US inflation expectations. There has at times been speculation that the BOJ’s additional rate hike could come from September onward.