The Japanese yen declined in the Asian market on Tuesday against a basket of major and minor currencies, deepening its losses for the third consecutive day against the US dollar and hitting its lowest level in three weeks, amid negative pressure on the Japanese currency and expectations of further declines toward the 150 yen barrier.
Markets are awaiting the release later today of key US inflation data for June, which will provide strong clues about the likelihood of US interest rate cuts during the second half of this year.
Despite rising expectations for a Japanese interest rate hike at the meeting later this month, the market is still awaiting the release of more significant economic data from Tokyo regarding inflation, wages, and unemployment levels in the world’s third-largest economy.
The Price
• USD/JPY exchange rate today: The dollar rose against the yen by 0.15% to ¥147.89 — the highest since June 23 — from today’s opening level of ¥147.69, with a low of ¥147.65.
• The yen lost 0.2% against the dollar at Monday’s settlement, marking its second consecutive daily loss due to rising US yields.
Negative Pressure
The Japanese currency is currently facing increased negative pressure, particularly due to the difficult trade negotiations between the United States and Japan, in addition to the rise in the yield on US 10-year Treasury bonds.
Amid these pressures, some global forecasts point to further declines in the yen exchange rate toward the barrier of 150 yen per one US dollar.
US Dollar
The US Dollar Index rose on Tuesday by about 0.1%, extending its gains for the fourth consecutive session and reaching a three-week high at 98.14 points, reflecting continued strength in the US currency against a basket of major and minor currencies.
This rise comes amid a fresh jump to a four-month high in the yield on 10-year US Treasury bonds, as expectations for Federal Reserve interest rate cuts have weakened.
To reassess those expectations, markets await later today the release of key US inflation data for June.
Federal Reserve Chairman Jerome Powell stated that he expects inflation to rise this summer due to tariffs, which is expected to keep the US central bank’s interest rates unchanged until later this year.
Japanese Interest Rate
• Recent data released in Tokyo showed increased pressure on policymakers at the Bank of Japan.
• Amid this data, the pricing of expectations for the Bank of Japan to raise interest rates by a quarter percentage point in the July meeting rose from 35% to 45%.
• To reassess those expectations, investors are awaiting further data on inflation, unemployment, and wage levels in Japan.
