Yen Backs Off fell on Tuesday against a basket of major rivals, marking the second consecutive day of losses against the dollar. This decline comes as traders take profits and the market anticipates confirmation of the Bank of Japan’s (BOJ) suspected intervention in the forex market last Friday.
Dollar Gains Tempered by Powell’s Remarks
Despite the yen’s recent downturn, the dollar’s gains were limited due to less aggressive comments from Fed Chair Jerome Powell. His remarks this week have increased the likelihood of multiple rate cuts by the Federal Reserve this year.
Price Movements
The USD/JPY pair rose 0.5% today to 158.73, with a session low of 157.98. The yen lost 0.1% on Monday
marking its first loss in three days, retreating from a four-week high of 157.17 yen per dollar.
BOJ Intervention
Daily operations data from the BOJ revealed that it spent nearly $22 billion on Thursday to support the yen. The currency showed strong gains against most major rivals on Friday
sparking speculation of another intervention by the BOJ on that day. Previously, the BOJ spent approximately $61.55 billion in late April to bolster the yen.
US Interest Rates
In a recent speech in Washington, Fed Chair Jerome Powell expressed confidence that inflation is returning to the 2% target sustainably, citing three consecutive months of better-than-expected consumer price data. Following his comments, the probability of a 0.25% rate cut by the Federal Reserve in September has reached a full 100%
according to the Fedwatch tool. There is also a 100% likelihood of another rate cut in November.
Conclusion
The yen’s recent decline is primarily attributed to profit-taking and market speculation about the BOJ’s intervention activities. Meanwhile, the dollar’s gains are moderated by dovish remarks from Fed Chair Powell
which have reinforced expectations of upcoming rate cuts. As the market continues to react to these developments
the yen and the dollar’s trajectories will likely remain influenced by central bank actions and economic data.
FAQs
- Why did the yen fall against the dollar? The yen fell due to profit-taking and speculation about the Bank of Japan’s intervention in the forex market.
- What influenced the dollar’s recent performance? The dollar’s gains were tempered by less aggressive remarks from Fed Chair Jerome Powell
which increased the likelihood of multiple rate cuts by the Federal Reserve this year. - What are the current price movements for USD/JPY? The USD/JPY pair rose 0.5% to 158.73
with a session low of 157.98. - How much did the BOJ spend on intervention? The BOJ spent nearly $22 billion on Thursday and approximately $61.55 billion in late April to support the Yen Backs Off.
- What did Fed Chair Jerome Powell say about inflation? Powell expressed confidence that inflation is returning to the 2% target sustainably
citing three consecutive months of better-than-expected consumer price data.