- The Japanese Yen (JPY) is rising, adding to Friday’s gains
- The NY Fed checked rates for the BoJ
- The US Dollar (USD) has fallen sharply
- Intervention worries, and a possible US shutdown weigh on demand
The US dollar Japanese yen (USD/JPY) exchange rate is falling, extending last week’s losses. The pair fell 1.5% in the previous week, settling on Friday at 155.72. On Friday at 21:00 UTC, USD/JPY trades –1.15% at 153.91 and traded in a range of 151.31 to 155.35. week.
The yen is extending its gains on Monday, climbing as much as 1.5% against the dollar at one point, following comments from Japanese officials that fueled speculation the government could intervene in the market to prevent the currency from resuming its slide.
The yen rose to a high of 153.31 per dollar, its strongest level since early November, following warnings from Prime Minister Takaichi that the government is prepared to step in to prevent any abnormal market moves.
This came after a sign on Friday that the US may be prepared to step in to join Japan in defending the yen, after the New York Fed checked rates for the Bank of Japan. This is often considered a warning. ahead of an intervention.
The fact that Japan will closely coordinate with the US is making the market even more nervous.
The stronger yen would help rein in imported inflation, particularly food and energy, which has been a big concern for households. Meanwhile, the U.S. dollar could help Trump strengthen manufacturing by making U.S. products cheaper overseas. As a result, this could be considered a win-win for both sides.
The U.S. dollar is falling across the board. The US dollar index, which measures the USD against a basket of currencies, is falling -0.58% on Monday to 97.04, extending losses from last week. The USD fell 1.8% lower across the week.
The US dollar has slumped amid concerns that the US may coordinate with Japan to intervene in currency markets.
The US dollar is also falling amid concerns that the US government could face another shutdown next week. Top Democrats in the Senate, including Chuck Schumer, have said that their party would vote against funding legislation which includes money for the Homeland Security Department following recent fatalities by ICE.
These worries are invigorating the “sell America” trade.
Attention will turn to the Federal Reserve interest rate decision on Wednesday, where the fight is expected to leave rates unchanged.