The Japanese yen fell in the Asian market on Monday against a basket of major and minor currencies, deepening its losses for the fourth consecutive day against the US dollar, recording its lowest level in two weeks, as the market awaits more evidence about the possibility of a third increase in Japanese interest rates this year.
The rise in the yield on the US 10-year Treasury bonds widened the yield gap between Japan and the United States, which puts negative pressure on the Japanese currency levels, awaiting the US jobs report for August later this week. Price view • The Japanese yen exchange rate today: The dollar rose against the yen by 0.35% to (146.60 yen), the highest since August 21, from the opening price of today's trading at (146.09 yen), and recorded a low of (145.83 yen).
The Japanese yen lost 0.8% against the US dollar on Friday, its third straight daily loss, as US yields rose.
Over the course of August's trading, the yen managed to achieve a 2.55% rise against the dollar, in the second consecutive monthly gain, due to the enormous pressure on yen carry deals.
Japanese Interest Rates Traders still see a low chance of a Japanese interest rate hike at the October meeting, with the odds of an additional rate hike in December hovering around 70%.
The market is awaiting the release of more economic data in Japan, in addition to comments from some Bank of Japan officials, in order to obtain more evidence about the future of Japanese interest rates before the end of this year.
US Treasury yieldsThe yield on 10-year US Treasury bonds hit a two-week high of 3.928% on Friday, as the prospects for aggressive monetary policy easing in the United States receded, especially after the US economy grew better than expected in the second quarter of this year.
According to the CME Group's FedWatch tool, the probability of a 50 basis point cut in US interest rates at the September meeting is currently priced at 31%, and the probability of a 25 basis point cut is priced at 69%.
In order to re-price these possibilities, investors will be awaiting the release of several important data on the US labor market throughout this week, especially the release of new non-agricultural jobs data on Friday.
The widening gap between long-term bond yields between Japan and the United States makes Japan's currency yields less of an investment target for short buyers and deal financing, which puts negative pressure on the Japanese yen exchange rate.
USD/JPY Forecast: IG Market Analyst Tony Sycamore said: The recent strength of the US dollar against the Japanese yen is unlikely to continue.
