Yen lost ground in Asian trade against a basket of major rivals, heading for the second loss in a row against the dollar away from three-week highs amid active profit-taking, while intervention momentum from Japanese authorities faded. 

Traders are focusing back on the fundamentals, with the stark interest rate differences between the US and Japan coming to the forefront once more, in turn pressuring the yen. 

However, ongoing declines by US 10-year treasury yields is somewhat weakening the dollar and stemming yen’s losses. 

The Price

USD/JPY rose 0.5% to 154.59 yen, with a session-low at 153.83 yen.

Yen lost 0.6% against the dollar on Monday, the first loss in four days on profit-taking away from three-week highs at 151.86 yen per dollar.

Yen also lost ground as the Bank of Japan stopped intervening to support the local currency despite official holidays in Japan and the UK. 

Yen rose over 3.5% last week against the dollar, the largest weekly profit since November 2022 after the BOJ intervened in the forex market and bought nearly $60 billion worth of yen. 

Intervention Strategy 

Traders believe that Japanese authorities intervened for at least two days last week to boost the yen after trading below 160 yen per dollar.

The Wall Street Journal reported the government’s intervention spanning Monday and Wednesday, with a focus on low-liquidity days to maximize effects. 

According to the current intervention strategy, it was anticipated that upcoming public holidays in Japan and the UK this month could become windows for further aggressive interventions by the Bank of Japan. 

Withdrawal 

However, Japanese authorities curtailed their intervention, and refused to comment on their role in the forex market. 

Interest Rate Gap

The current US-Japan interest rate gap stands at 540 basis points in favor of the US, and such a gap will continue to offer support for the dollar.

The gap could shrink multiple times this year as the Federal Reserve  prepares to ease policies. 

US Yields

US 10-year treasury yields fell by 0.1% today on track for the fifth loss in a row, hovering near three-week lows at 4.469%, and hurting the dollar’s standing, following somewhat weak US payrolls data last week, which boosted the odds of multiple Fed rate cuts this year. 

The dollar rose against most major rivals on Monday after stabilizing earlier in the session.

It came after Wall Street recouped following weak US payrolls data on Friday, which showed the anti-inflation policies by the Fed are bearing fruits, in turn paving the way for policy tightening soon.

Thus investors now expect nearly two interest rate cuts by the Federal Reserve this year. 

On trading, the dollar index rose 0.1% as of 21:42 GMT to 105.1, with a session-high at 105.2, and a low at 104.8.

Loonie 

The Canadian dollar rose 0.2% as of 21:52 GMT against the US dollar to 0.7318. 

Aussie

The Australian dollar rose 0.2% against its US counterpart to 0.6626. 

International benchmark Brent rose 1.25% in the early American trade on track for the first profit in six sessions away from seven-week lows amid active short-covering.

The gains came after Saudi Aramco decided to raise the price of its crude exports to Asia for the third month in a row amid an outlook of strong global demand. 

In addition, tensions in the Middle East are mounting once again after Israeli forces ordered about 100 thousand Palestinians to move out of Rafah ahead of an expected assault. 

Prices

Brent rose 1.25% to $83.79 a barrel, with a session-high at $82.78, after closing down 1.1% on Friday, plumbing a seven-week trough at $82.78.  

Brent lost 6% last week, the second weekly loss in three weeks, and the largest since late January amid concerns about supply gluts in the US.

Saudi Crude 

Saudi Arabia raised the price of its crude oil exports to Asia for the third straight month according to Bloomberg, indicating confidence about increasing global demand. 

Geopolitical Tensions 

Hamas-Israel ceasefire talks stumbled once again with both sides accusing the other of ruining the agreement deliberately. 

Israeli PM Benjamin Netanyahu pledged not to acquiesce to international pressures, and to pursue the war in Gaza until Hamas is definitively beaten. 

The ongoing struggle in Gaza poses some threats to supplies in the Middle East, thus underpinning prices. 

Bitcoin gained ground on Monday and expanded its profits for the fifth straight session, scaling a two-week high amid positive sentiment in the market as US treasury yields taper off. 

A strong buying wave is carrying the world’s biggest cryptocurrency, which could bring it back towards the coveted $70,000. 

The Price

Bitcoin at Bitstamp rose 2.3%, or $1,489 to $65,513, the highest since April 24, with a session-low at $63,745. 

Bitcoin rose 0.25% on Sunday, the fourth profit in a row, while rising 1.5% last week, the first weekly profit in five weeks away from three-month lows at $56,500. 

Crypto Market Value

Crypto market value surged by $55 billion on Monday to $2.540 trillion as both bitcoin and ethereum lead cryptocurrencies higher.

US Yields 

US 10-year treasury yields fell by 0.65 basis points, on track for the fourth loss in a row, hovering near three-week lows at 4.455%. 

The developments came after weak US jobs data, which reduced pressures on the Federal Reserve and opened the way for multiple rate cuts this year.

US Labor Sector 

The US government reported the addition of 175 thousand new jobs to the economy in April, down from 315 thousand in March, while analysts expected the addition of 240 thousand jobs. 

US Rates Outlook 

Following the data, the odds of a Fed 0.25% interest rate cut in June rose to 20% according to the Fedwatch tool, while the odds of such a cut in July rose to 45%. 

Now investors expect two interest rate cuts by the Federal Reserve this week.