- The Japanese Yen (JPY) rose on Friday but fell across the week
- Finance Minister Katayama threatened intervention
- The US Dollar (USD) rose against its major peers
- Fed Williams’ comments raised December rate cut expectations
The US dollar Japanese yen (USD/JPY) exchange rate fell on Friday after four days of gains. The pair rose 0.20% in the previous session, settling on Thursday at 157.48. On Friday at 21.00 UTC, USD/JPY traded -0.69% at 156.39 and traded in a range of 156.20 to 157.57. The pair rose 1.2% across the week.
The Japanese yen recovered from a nearly 10-month low on Friday after Japanese officials stepped up verbal interventions to stem the currency’s depreciation. Japanese Finance Minister Katayama said intervention was on the table to address excessive volatility, sending signals to traders to stay on high alert amid yen buying.
There has been pressure in recent weeks due to concerns about the worsening fiscal position, and the currency has dropped by more than 5% since Prime Minister Katie was elected at the start of October. Her cabinet approved a ¥21.3 trillion (135 billion U.S. dollar) stimulus package.
The US Dollar fell against the yen on Friday but rose versus its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is traded +0.02% at 100.18 on Friday.
The U.S. dollar is away from a six-month high on Friday after New York Fed President John Williams said the central bank could still cut interest rates in the near term without jeopardizing its inflation goal.
His comments quickly shifted market expectations for a December rate cut. According to the CME Group FedWatch tool, the market is pricing in a 71% probability of a 25-basis-point rate cut in December, up from just 27% prior to his comments.
On the data front, activity data was mixed. Manufacturing activity, as measured by the manufacturing PMI, hit a four-month low in November amid higher tariffs, which increased import costs and weighed on demand. The manufacturing PMI slipped to 51.9 from 52.5 in October, falling short of expectations of 52.
However, the services PMI rose to 55 from 54.8 in October, with new orders for services firms strengthening to 255, up from 53.6.
As a result, the composite PMI, a good gauge of business activity, edged up to 54.8 from 54.6, signalling continued economic expansion.
