The Japanese yen rose in the European market on Thursday against a basket of major and minor currencies, for the first time in the last four days against the US dollar, as part of attempts to recover from the lowest level in three months, as there is relative activity in buying operations from cheap levels.
This comes after the latest opinion polls in Japan showed the possibility of the coalition government losing its parliamentary majority in the general election next Sunday, which means the possibility of increasing political risks that complicate the Bank of Japan's plans for the future of monetary policy.
The recovery of the Japanese currency is also supported by the halt in the rise in the yield on US 10-year Treasury bonds, ahead of the release of very important economic data on the performance of major sectors and weekly unemployment claims in the United States.
Price overview
Japanese Yen exchange rate today: The dollar fell against the yen by 0.3% to (152.28¥), from the opening price of today’s trading at (152.75¥), and recorded its highest level at (152.83¥).
The Japanese yen ended trading on Wednesday down 1.1% against the US dollar, in its third consecutive daily loss, and recorded a three-month low of 153.18 yen, due to the broad rise in US yields.
Japanese elections
Recent opinion polls in Japan have shown that the coalition government could lose its parliamentary majority in Sunday's general election, potentially increasing political risks that complicate the Bank of Japan's plans for future monetary policy.
Ruling party leader and new Prime Minister Shigeru Ishiba recently said that the country's economic conditions do not currently support raising interest rates again. Shigeru Ishiba reiterated that the Bank of Japan is responsible for the details of the country's monetary policy.
US Treasury yields The yield on the 10-year US Treasury note fell 0.6% on Thursday, giving up a three-month high of 4.260%, on track for its first loss in four sessions, as corrections and profit-taking weighed.
According to the CME Group's FedWatch tool, the probability of a 25 basis point cut in US interest rates at the November meeting is currently priced at 92%, and the probability of keeping rates unchanged is priced at 8%.
In order to re-price these possibilities, investors are awaiting, at successive times today, the issuance of a number of important economic data from the United States, on the performance of the main sectors during October, and on weekly unemployment claims.
Strong economic momentum coupled with the Fed's messaging emphasising a gradual and deliberate approach to further monetary easing is making markets nervous, said Rodrigo Catril, chief foreign exchange strategist at National Australia Bank.
“Risk aversion coupled with higher US Treasury yields favored the US dollar, with the yen leading declines across major and minor currency pairs,” Cattrell added.
Japanese Yen Performance Forecast Here at FX News Today we expect: The Japanese Yen will continue to form a recovery cycle in the short term against the US Dollar, especially if US data comes out worse than market expectations, which will increase the chances of a Federal Reserve interest rate cut of about 25 basis points next November.
