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The Tokyo market opened the week with a slightly corrective movement in USDJPY
which had reached a high of 143.87 last week due to a strengthening dollar against the yen.
“The Tokyo market opened the week with a slightly corrective movement in USDJPY”
The Tokyo market kicked off the week with a modest corrective movement observed in the USD/JPY pair, which had previously surged to a peak of 143.87 due to the robustness of the US dollar against the Japanese yen. However, the reopening of the Chinese market following the holiday triggered concerns over risks, leading to an amplified risk-averse sentiment. This sentiment was primarily influenced by the devaluation of the Chinese yuan and the lackluster performance of Asian stocks, resulting in a prevalent demand for the yen. During the morning session, the pair briefly dipped to around 143.24 before experiencing a minor rebound towards the 143.60 range, indicative of a continued weakening of the yen.
In the afternoon, the selling pressure on the US dollar and the corresponding yen buying pressure gained slight prominence, causing the pair to trade in the mid-143 range. While yen buying remained somewhat restrained and the pair managed to avoid dropping below the morning low, there was notable resistance to upward movement, implying a cautious market sentiment.
Meanwhile, the EUR/JPY pair fluctuated within the range of 156 yen. Towards the end of the previous week, the euro witnessed notable weakness amidst disappointing PMI data from Germany and other countries. It initially declined from the upper 156 yen level to the 155.00 yen range, but managed to recover to the upper 156 yen level by the end of the week. Starting the new week on a positive note, the pair reached approximately 156.20 yen due to adjustments in the USD/JPY pair. However, the downward pressure was not significant, allowing the pair to maintain its trading range around 156 yen.
Concurrently, EUR/USD exhibited relative stability around the 1.0900 dollar level.
Following the holiday period, the Chinese yuan experienced a softening trend, partly driven by selling pressure on the offshore yuan during the break. The morning reference rate established by the People’s Bank of China signaled a depreciation of the yuan against the dollar, resulting in an opening above 7.20 yuan compared to the pre-holiday level of 7.17 yuan per dollar. Throughout subsequent trading, the pair continued its trajectory with the dollar strengthening against the yuan, reaching a peak of 7.2197.
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