The Japanese yen fell in the Asian market on Tuesday against a basket of major and minor currencies, deepening its losses for the fifth 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 Japanese currency is negatively pressured by the rise in the yield on US 10-year Treasury bonds, which widens the yield gap between Japan and the United States, awaiting important data on the US labor market throughout this week.
Price overview • Japanese yen exchange rate today: The dollar rose against the yen by 0.25% to (147.21¥), the highest since August 20, from the opening price of today’s trading at (146.85¥), and recorded the lowest level at (146.52¥).
• The Japanese yen lost 0.5% against the US dollar yesterday, Monday, in its fourth consecutive daily loss, due to the rise in US yields. Japanese interest rates: Traders still see a low chance of raising Japanese interest rates at the upcoming October meeting, with the chances of an additional increase in Japanese interest rates next December stable 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 the 10-year US Treasury note rose about 0.65 percentage points on Tuesday, extending gains for the sixth straight session, to a three-week high of 3.932%.
This development in the US bond market comes as a result of the decline in the chances of aggressive easing of monetary policy in the United States, especially after the US economy grew better than expected during 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 from 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.
