Kazuo Ueda’s Comments in Japanese Parliament, Yen Rises as US Yields Drop: The Japanese yen rose in the Asian market on Wednesday, recording gains for the fourth consecutive day against the US dollar. The yen reached its highest level in two weeks thanks to continued selling of the US currency, as well as noticeable activity in buying the yen, ahead of comments by Bank of Japan Governor Kazuo Ueda in the Japanese parliament. Meanwhile, US bond yields continued to decline ahead of the release of the minutes of the last Federal Reserve meeting. These minutes are expected to provide strong evidence about the possibility of a Federal Reserve interest rate cut this year.
Price outlook: Japanese yen exchange rate today: The dollar fell against the yen by about 0.25% to reach 144.93 yen, the lowest level since August 7, compared to the opening price of today’s trading at 145.25 yen, while recording a high of 145.59 yen.
Japanese Yen Performance: The Japanese yen ended Tuesday’s trading up 0.9% against the dollar, recording its third consecutive daily gain on the back of a decline in US yields. About USD/JPY The USDJPY pair is also known as the “gopher” trade, and is one of the most traded pairs in the world. The value of these currencies relative to each other is affected by the interest rate differential between the Federal Reserve and the Bank of Japan.
Watch the Japanese Diet session: The Japanese Diet session on Friday will be closely watched, as traders discuss the Bank of Japan’s unexpected decision to raise interest rates last month, as well as the sudden shift in the central bank’s policy. Bank of Japan Governor Kazuo Ueda will speak about the recent decisions. Investors will be focused on Ueda’s tone, especially after his influential deputy, Shinichi Uchida.
US bond market developments amid expectations of interest rate cuts
This change in the US bond market comes at a time when the possibility of starting a new monetary easing cycle in the United States is approaching, with expectations of a rate cut next September. Regarding this potential move, markets are awaiting the release of the minutes of the Federal Reserve’s last monetary policy meeting, which was held on July 30 and 31.
The decline in US bond yields reinforces the weakness of the dollar: The yield on US 10-year Treasury bonds fell on Wednesday by 0.3 percentage points, continuing its decline for the fourth consecutive session. The yield recorded its lowest level in two weeks at 3.797%. This decline in yields reduces the attractiveness of investing in the US dollar. According to the CME Group’s “FedWatch” tool, the probability of a 50 basis point cut in US interest rates at the September meeting remains at 33%, while the probability of a 25 basis point cut is 67%.
The narrowing gap in long-term bond yields between Japan and the United States makes Japanese currency yields an attractive target for investors, which enhances the rise in the Japanese yen exchange rate.
Japanese Yen Forecast: The yen is expected to continue its positive move against the US dollar, especially if the Federal Reserve minutes include less hawkish comments, which could boost the chances of a 50 basis point US interest rate cut.
USD/JPY Price Analysis: All Eyes on the Fed Minutes The Japanese yen stabilized at around 145.00 yen per dollar at the start of trading on Wednesday, after hitting a two-week high in the previous session, supported by strong expectations that the Reserve Bank will start.
Yesterday, the Japanese yen rose from a strong support area, while many other currencies fell, which sent the volatility index skyrocketing.
Stronger Dollar, Not Weaker Yen
The Japanese yen has always been considered one of the world’s major currencies, as Japan is one of the largest exporting countries in the world, and what enhances the value of its currency is the country’s gross domestic product, which is the third largest economy after the United States and China, supported by the technology, industry and other sectors. The Japanese yen has acquired the title of safe haven among the currencies that investors resort to to preserve the value of their savings, supported by the stability it has witnessed for many years. However, this reality has changed in recent months, as the Japanese government was forced to intervene to save the yen from declining, which has cost it more than 50 billion US dollars so far. This change has prompted observers to wonder whether the yen has lost its title as a safe haven.
The strength of the dollar, not the weakness of the yen: The Japanese yen has declined from an average of 90 yen to the dollar to about 110, and finally to 150 yen, attributing this decline to the strength of the dollar and not to the weakness of the Japanese currency. The Yen Will Remain a Safe Haven: He refused to say that the Japanese yen has lost its title as a safe haven, but that it is still a safe haven, as it is considered one of the most important international reserve currencies (SDR) along with four major currencies: the US dollar, the British pound, the euro, and the Chinese yuan. The decline that the yen witnessed for the first time in about 32 years is due to current global conditions and other major shocks such as the continued increase in US interest rates.
The economy is not measured by the exchange rate
He believes that with expectations of further increase in US interest rates, a large portion of indirect foreign investment or hot money will be attracted to the United States, which has clearly affected and will affect demand for the Japanese yen.
The economy is not measured by the exchange rate: According to analysts, the yen is witnessing a temporary phase, and will recover again, with the recovery of the global economy after the resolution of the current crises, especially since Japan is one of the first global economies. They called for not measuring the economy by the exchange rate, as the Japanese economy has the components that help it overcome the crisis, and therefore any decline in the yen does not mean weakness and will not continue.
