The yen rose in Asian trade on Thursday on track for the eighth daily profit in a row against the dollar, hitting a two-week high on strong haven demand amid concerns about US financial stability.
The rise also comes after bullish remarks by the Bank of Japan Deputy Governor this week, which boosted the odds of a BOJ rate hike this year.
The Price
The USD/JPY price fell 0.35% today to 143.14 yen per dollar, the lowest since May 7, with a session-high at 144.40.
The yen rose 0.6% on Wednesday against the dollar, marking the seventh profit in a row, the longest such streak of daily gains since April 2021 on haven demand.
US Fiscal Developments
US President Donald Trump convened with his Republican allies in the House of Representatives but failed to convince them to support his tax reform bill, with hawks insisting the bill doesn’t cut spending far enough.
Weak demand on a recent US 20-year treasury note auction, and the “Sell America” mindset, also piled up on the dollar and Wall Street.
The markets are already on edge after Moody’s decision to cut the US credit rating by one notch.
Exchange Rate
Japan’s finance minister Katsunubo Kato and US Treasury Secretary Scott Bessent both agreed that the current USD/JPY forex rate reflects fundamental factors.
The both reasserted both countries’ commitment to maintain an exchange rate decided by market forces.
Japanese Rates
Bank of Japan Deputy Governor Shinichi Uchida said the bank will continue to raise interest rates if the economy recovers from the negative impact of US tariffs, however he still cautioned that the economic outlook remains highly uncertain.
During a Diet session, Uchida said that main inflation will likely settle near the bank’s 2% target as long as local economic activities pick up.
Following the remarks, the odds of a BOJ rate hike in June rose from 25% to 30%.
Now traders await important Japanese data on inflation, unemployment, and wages to gather more clues.
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