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Yen deepens losses to a week low on US yields
AI Summary
- Japanese yen declines in Asian markets, hitting a two-week low against the US dollar due to rising US 10-year Treasury yields
- 10-year US Treasury yield rises, nearing a three-week high at 4.353%, supporting further investment in the US dollar
- Market awaits remarks by Federal Reserve Chairman Jerome Powell at the Jackson Hole Economic Symposium to reassess expectations for interest rate cuts
The Japanese yen declined in Asian markets on Tuesday against a basket of major and minor currencies, deepening its losses for the second consecutive day against the US dollar, hitting a two-week low amid the continued rise in US 10-year Treasury yields.
With current weak expectations for the Bank of Japan to raise interest rates by 25 basis points in September, the market is awaiting further evidence on the path of Japanese monetary policy normalization during the remainder of the year.
Price Overview
• USD/JPY today: the dollar rose about 0.2% against the yen to ¥148.12, the highest in a week, from the opening level of ¥147.86, after hitting a low of ¥147.62.
• The yen ended Monday’s session down 0.5% against the dollar, its biggest daily loss since July 31, amid recent developments in the US bond market.
US Treasury Yields
The 10-year US Treasury yield rose by about 0.25% on Tuesday, extending gains for the fourth consecutive session, nearing a three-week high at 4.353%, which supports further investment in the US dollar.
These developments in the bond market came after strong US producer price and retail sales data, reducing the likelihood of a Federal Reserve interest rate cut in September.
To reassess these expectations, markets this week are awaiting remarks by Federal Reserve Chairman Jerome Powell at the annual Jackson Hole Economic Symposium.
Japanese Interest Rates
• Current pricing of the probability for the Bank of Japan to raise rates by 25 basis points at the September meeting stands around 40%.
• To reprice these odds, investors await more data on inflation, unemployment, and wage levels in Japan.
• Bank of Japan Governor Kazuo Ueda is scheduled to speak at the Jackson Hole Symposium, and his remarks are expected to provide further evidence on the course of Japan’s monetary policy normalization this year.
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