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The yen depreciation has resumed
with the USD/JPY briefly approaching the 141.40 level during Bank of Japan (BOJ) Governor Ueda's press conference.
“According to reports from the London foreign exchange market, the yen depreciation has resumed, with the USD/JPY briefly approaching the 141.40 level during Bank of Japan (BOJ) Governor Ueda’s press conference”
In the London market, the yen depreciation has regained momentum once again. During the BOJ policy meeting held today, the decision was announced to maintain the policy interest rate and continue with the easing measures, including Yield Curve Control (YCC). This led to a reaction in yen selling as some foreign investors and others had expectations of policy adjustments. Following the meeting, BOJ Governor Ueda provided a thorough explanation of the necessity of sustaining accommodative measures during the subsequent press conference, resulting in the USD/JPY reaching a high of around 141.40. However, it fell short of the 141.50 level observed in the overseas market the previous day and experienced a correction to around 140.80. Subsequently, the USD/JPY stabilized near the 141 level.
Cross-yen pairs also demonstrated strength influenced by the upward trend in the Tokyo market. The EUR/JPY reached approximately 154.70, GBP/JPY around 180.85, and AUD/JPY around 97.26, marking their respective highs. Additionally, the European stock market is performing well today, following the rise in US stocks on the previous day, contributing to the yen selling driven by increased risk appetite.
This week, both the Federal Open Market Committee (FOMC) and the European Central Bank (ECB) meetings hinted at continued interest rate hikes in the future, with particular emphasis on the ECB’s additional hawkish stance. After the conclusion of the ECB meeting yesterday, hawkish ECB members also highlighted the possibility of a rate hike in September in addition to July. However, the EUR/USD is trading around the mid-1.09 level, and GBP/USD around 1.28, indicating relatively narrow price movements.
The USD/JPY is currently trading around the 141 level. After briefly dipping to approximately 139.85 in the morning session in Tokyo, it has shown a firm upward trend. The yen depreciation has been driven by the BOJ’s commitment to maintaining accommodative measures and their continued implementation of large-scale easing policies. Consequently, the USD/JPY reached a high of around 141.40 during the early stages of trading in London. However, it experienced a temporary setback to around 140.80, failing to reach the 141.50 level observed in the overseas market the previous day. Subsequently, the price movement has stabilized.
The EUR/USD is currently trading around the mid-1.09 level. Following the ECB meeting yesterday, it underwent a significant upward move from the low-1.08 level to the mid-1.09 level. It has since maintained a relatively high position throughout the Tokyo market. Although it briefly reached around 1.0962 during the early hours of London trading, there has been little further price movement, and the market remains in a consolidative phase. Lagarde, the ECB President, clearly stated a rate hike in July yesterday, and today, hawkish ECB members such as Nowotny, Holzmann, and Unsch have also indicated the possibility of a rate hike in September. The EUR/JPY rose in line with the movements of the USD/JPY, reaching a high of around 154.72 at one point. It then experienced a correction to near the 154 level but has maintained a solid stance without breaking below that level. The GBP/EUR pair is currently trading in a consolidative manner.
The GBP/USD is currently trading near the 1.28 level, reflecting a notable surge in buying momentum. This upward movement, witnessed in conjunction with the EUR/USD, propelled the currency pair from the mid-1.26 range to the upper 1.28 range in the overseas market during the previous day. Subsequently, in the Tokyo market, after a phase of consolidation near the elevated levels, the pair experienced substantial buying activity, driving it to around 1.2818 during the early trading hours in London. Since then, it has exhibited fluctuation within the upper range of the mid-1.27s to the vicinity of 1.28.
Likewise, the GBP/JPY followed suit and witnessed a surge in demand, aligning with the positive performance of the USD/JPY. It attained a peak of approximately 180.85 during the initial stages of trading in London. Although a subsequent correction led to selling pressure, the currency pair has maintained a robust position within the 180 range.
Meanwhile, the EUR/GBP has been consolidating within the range of approximately 0.8550 to 0.8565, suggesting a period of stability and equilibrium between the two currencies.
Looking ahead, the upcoming week will witness the Bank of England (BOE) announcing its policy interest rate. The prevalent expectation among market participants leans towards a 25 basis point rate hike. Moreover, market observers have been monitoring movements that indicate the possibility of a substantial increase of approximately 100 basis points in the future. Concerns regarding inflationary pressures, surpassing those faced by the European Central Bank (ECB), have become more pronounced. Consequently, there is a likelihood that the trend of buying the pound and selling the yen will persist in the following week.
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