The Japanese yen fell in the Asian market on Wednesday against a basket of global currencies, resuming its losses against the US dollar, which stopped yesterday as part of a recovery from the lowest level in 13 months. This decline comes after data showed a contraction that exceeded expectations for the Japanese economy during the third quarter of this year.
The Japanese currency's losses are curbed by the Japanese Finance Minister's statements about currency movements in the Forex market, in addition to the current ongoing decline in the yield on ten-year US Treasury bonds.
Japanese yen exchange rate today
The dollar rose against the yen by approximately 0.3% to (150.79 yen), from the opening price of today’s trading at (150.38 yen), and recorded the lowest level at (150.25 yen).
On Tuesday, the yen achieved a 0.9% rise against the dollar, the first gain in the last seven days, and the largest gain since last July 13, after recording the previous day the lowest level in 13 months at 151.90 yen.
In addition to purchases from cheap levels, this largest daily gain in four months is due to the statements of the Japanese Finance Minister, in addition to lower-than-expected data on consumer prices in the United States.
Japanese Finance Minister Shunichi Suzuki said on Tuesday: He is closely monitoring currency movements in the forex market. Suzuki added: We will continue to take all possible measures to address chaotic exchange market movements.
Japanese economy
Data issued today in Tokyo showed that the Japanese economy contracted at a rate of 0.5% during the third quarter of this year, in the first contraction in the last three quarters, and at the worst pace of contraction since the first quarter of last year, worse than market expectations, a contraction at a rate of 0.1%, and the Japanese economy recorded Growth at a rate of 1.2% in the second quarter and a rate of 0.9% in the first quarter.
These data enhance the possibility of the Central Bank of Japan adhering to a very accommodative monetary policy to support the recovery of the third largest economy in the world, and reduced speculation about an early exit from negative interest rates.
Yield on US bonds
The yield on ten-year US Treasury bonds fell on Wednesday by 0.5%, deepening its losses for the third session in a row, recording a two-month low of 4.428%, which reduces investment opportunities in the US dollar.
This development in the US bond market comes after the release of US consumer price data for October, which recorded a decline less than market expectations, and the core inflation index recorded the lowest rise in nearly two years.
Accordingly, the pricing of futures contracts for the possibility of raising US interest rates at a pace of 25 basis points decreased during the December 13 meeting from 15% to 5%, and the pricing of futures contracts for the possibility of keeping interest rates without any change rose from 85% to 95%.
Traders also moved forward their expectations for the first expected 25 basis point cut in the federal funds rate to May from July 2024.
The continued decline in US bond yields is in favor of an increase in the Japanese yen exchange rate against the US dollar, as the gap between long-term bond yields between Japan and the United States shrinks.
