USD/JPY is trading stronger near 161.40 in Friday’s early Asian session. The difference in monetary policy between Japan and the US is weakening the JPY. There are expectations of Fed rate cuts this year and concerns about FX intervention which may limit the pair’s upside.
The USD/JPY pair remains firm near 161.40 during the early Asian session on Friday. The US Dollar is reaching nearly 38-year highs against the Japanese Yen due to the significant rate gap between Japan and the US. Traders are awaiting the US June employment data, including Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings.
There is speculation of FX intervention from Japanese authorities as USD/JPY continues to rise. Traders are closely monitoring UST yields and the US Dollar for guidance. The Federal Reserve (Fed) has not committed to interest rate cuts yet, but softer US inflation data and weak Services PMI suggest potential rate cuts. The upcoming US employment data for June is crucial, with NFP expected to show 190K job additions, Unemployment Rate forecasted at 4%, and Average Hourly Earnings projected to drop to 3.9% YoY.
The Bank of Japan’s currency control measures play a significant role in determining the value of the Japanese Yen. The BoJ’s ultra-loose monetary policy, aimed at stimulating the economy, has led to a depreciation of the Yen against other major currencies. This policy divergence between the BoJ and other central banks, especially the US Federal Reserve, supports the US Dollar against the Japanese Yen.
The Japanese Yen is often considered a safe-haven asset, attracting investors during times of market turmoil for its stability. This behavior strengthens the Yen against riskier currencies in turbulent times.