- The Japanese Yen (JPY) is rising for a third day
- Hopes of a coherent policy lifts yen
- The US Dollar (USD) rises against major peers
- US non—farm payroll beat forecasts
The US dollar Japanese yen (USD/JPY) exchange rate is falling for a third day. The pair fell 0.96% in the previous session, settling on Tuesday at 154.39. On Wednesday at 19:00 UTC, USD/JPY trades -0.76% at 153.22 and traded in a range of 152.56 to 155.65.
Japanese yen strengthened again on Wednesday as investors believe that Prime Minister Takaichi’s landslide election victory brings political clarity and puts her in a strong position to control fiscal policy.
Expectations are for a more coherent fiscal policy, which could help lift growth and fuel rate hike optimism.
Both the yen and Japanese government bonds have risen following Takaichi’s impressive win at the weekend. Meanwhile, Japanese stocks also gained on the anticipation of stimulus flowing to consumers in Japan. Foreign inflows into Japanese equities also increase the demand for the yen
The U.S. dollar is falling against the yen but rising against major peers. The US dollar index, which measures the USD against a basket of currencies, is rising 0.1% on Wednesday to 96.89, after recent losses.
The US dollar is rising after today’s stronger-than-expected nonfarm payrolls report, which boosted Treasury yields and pushed back expectations for Fed rate cuts.
Today’s data showed 130,000 jobs were created, significantly above the 70,000 forecast and up from 48,000 added in December.
Unemployment also unexpectedly declined to 4.3% whilst wage growth was ahead of forecasts at 0.4%. Up from 0.3% previously.
The data pointed to a solid start to the year for the US labour market, easing concerns about recent weakness and supporting the Fed’s comments of signs the labour market is stabilising.
Following the data, U.S. Treasury yields ticked higher, and the market pushed back rate cut expectations to July from June.
