Chances of a third Japanese interest rate hike decline

Rising US yields weigh on Japanese currency

The Japanese yen fell in the Asian market on Thursday against a basket of major and minor currencies, deepening its losses for the second day in a row against the US dollar , recording its lowest level in three weeks, due to the minutes of the latest monetary policy meeting of the Japanese Central Bank.

Details showed that the bank's members were divided over how long the country should continue to raise interest rates, reducing the chances of a third increase in Japanese interest rates this year.

Price overview

Japanese Yen Exchange Rate Today : The dollar rose against the yen by 0.2% to (145.04¥), the highest since September 4, from today’s opening price of (144.75¥), and recorded its lowest level at (144.44¥).

The Japanese yen ended Wednesday's trading down 1% against the US dollar, its first loss in three days, after a broad rebound in long-term US yields.

Minutes of the Japanese Central Bank

Minutes of the Bank of Japan's monetary policy meeting on July 30-31, which raised interest rates by 15 basis points in Japan's second rate hike this year, showed policymakers divided over how quickly the bank should raise rates further.

At its September 19-20 meeting, the Bank of Japan decided not to make any changes to its current monetary policy tools, keeping interest rates steady at a range of 0.25%, the highest level since 2008 when the global financial crisis erupted.

The vote resulted in a majority of nine members voting in favour of keeping the interest rate unchanged, pending the release of more economic data in the country in the coming period to study the need to continue normalising monetary policy.

In its September monetary policy update, the Bank of Japan said Japan's economy has recovered moderately, while acknowledging weakness in some economic activities.

Japanese interest

Traders still see little chance of a Japanese interest rate hike at the Bank of Japan's October meeting, with the odds of a third rate hike in December priced in at 60%.

US bond yield

The yield on the 10-year U.S. Treasury note rose 0.1 percentage point on Thursday, holding gains for a second straight session and poised to hit a multi-week high, providing support for the U.S. dollar.

The development in the US bond market comes after strong data on new US home sales in August eased fears that the US economy was heading for a faster-than-expected decline.

Japanese Yen Performance Forecast

Here at FX News Today, we expect the Japanese Yen to continue moving in negative territory against the US Dollar, and the Japanese currency’s losses could worsen if US data comes in better than market expectations, in addition to more hawkish comments from Jerome Powell.