- The Japanese Yen (JPY) fell across last week
- Japanese authorities warn of intervention
- The US Dollar (USD) rises across the week
- US GDP was revised lower
The US dollar Japanese yen (USD/JPY) exchange rate rose on Friday for a fourth day. The pair rose 0.25% on Thursday, settling at 159.35. On Friday at 21:30 UTC, USD/JPY closed +0.25% at 159.73 and traded in a range of 159.00 to 158.75. The pair rose across the week.
The Japanese yen has seen persistent weakness, which continues to draw attention from Japanese authorities.
The yen has weakened to levels that previously triggered intervention by Japan’s Ministry of Finance. Japan’s Finance Minister, Katayama, recently warned that authorities are closely monitoring the foreign exchange market and are ready to take any necessary measures to address excessive volatility.
These comments could prevent the yen from weakening significantly further, at least in the near term.
Meanwhile, the Bank of Japan is expected to maintain a cautious approach to further rate hikes, preferring to assess wage growth and domestic demand before tightening policy again.
The U.S. dollar rose across the board on Friday. The U.S. Dollar Index, which measures the currency against a basket of major peers, climbed 0.62% to 100.36, recovering from losses in the previous session and gaining 1.4% over the week.
The dollar strengthened further on Friday, supported by safe-haven demand amid the ongoing Middle East conflict, despite U.S. macroeconomic data presenting a mixed picture for the economy.
U.S. core PCE, the Federal Reserve’s preferred gauge of inflation, ticked modestly higher, while fourth-quarter GDP was revised lower to 0.7% annualised, down from 1.4% previously. Despite signs of slowing economic activity, underlying inflation remains relatively persistent, reinforcing expectations that the Federal Reserve will keep interest rates higher for longer.
The Fed is widely expected to leave interest rates unchanged at 3.5%–3.75% at its meeting this week, and the market is questioning whether the Fed will be able to cut rates this year.