Yen moves in a negative zone as the week opens up

The Japanese yen declined in Asian markets on Monday at the start of the week’s trading against a basket of major and minor currencies, moving into negative territory against the US dollar and retreating from its three-week high, as the Japanese government ignored US pressure on the Bank of Japan to raise interest rates.

With the odds of a 25 basis point rate hike by the Bank of Japan in September still incomplete, markets are awaiting further evidence to clarify the path of Japanese monetary policy normalization during the remainder of this year.

Price Overview

• Today’s exchange rate for the Japanese yen: the dollar rose against the yen by about 0.3% to (147.58¥), from today’s opening price of (147.15¥), recording a low of (147.08¥).

• The yen ended Friday’s session higher by about 0.45% against the dollar, marking its third gain in four days and approaching a three-week high at 146.21 yen, supported by strong data on Japanese economic growth in the second quarter of this year.

• The yen posted a 0.4% weekly gain against the dollar last week, its third weekly increase in the past month, driven by rising expectations of a US interest rate cut in September.

US Pressure

The Japanese government late last week ignored rare and direct comments from US Treasury Secretary Scott Bessent, who said the Bank of Japan is “lagging behind” in its monetary policy — remarks seemingly aimed at pressuring the central bank to raise interest rates.

Japanese Interest Rates

• The market is currently pricing in around a 40% probability that the Bank of Japan will raise interest rates by 25 basis points at its September meeting.

• To re-evaluate these odds, investors are awaiting additional data on inflation, unemployment, and wages in Japan.

• Minutes from the June monetary policy meeting showed that some Bank of Japan board members said the central bank would consider resuming interest rate hikes if trade tensions eased.