- The Japanese yen held steady around 156.85 to the US dollar as investors prepared for the Bank of Japan’s policy meeting next week, where it could raise interest rates again to defend its currency.
- Japanese Prime Minister Fumio Kishida also said that the BOJ’s normalization of monetary policy would support Japan’s transition to a growth-based economy.
According to reliable trading platforms, the Japanese yen has risen by about 2% over the past two weeks amid suspected government intervention, with BOJ data suggesting authorities may have bought nearly 6 trillion yen on July 11 and 12 through intervention. Also, the data showed that Japan sold nearly $22 billion in US Treasuries in May to raise dollars, building up its war chest for potential foreign exchange market operations. Meanwhile, data last week showed that Japan's headline inflation rate remained unchanged at 2.8% in June, while core inflation rose to 2.6% from 2.5%.
On another note, according to electronic trading platforms, the yield on the Japanese 10-year bond rose as the Bank of Japan meeting was awaited. According to trading, the yield on the Japanese 10-year government bond rose above 1.05%, recovering from last week's losses amid growing expectations that the Bank of Japan will raise interest rates again at its policy meeting in July. The Bank of Japan is under continued pressure to raise interest rates, as the wide gap between domestic and foreign yields has led the yen to fall to its lowest levels in 38 years.
For his part, Japanese Prime Minister Fumio Kishida also said that the normalization of the central bank's monetary policy would support Japan's transition to a growth-based economy. Moreover, data last week showed that Japan’s headline inflation rate remained unchanged at 2.8% in June, while core inflation rose to 2.6% from 2.5%. Externally, investors are watching the US political scene after President Joe Biden withdrew from the 2024 race and endorsed Vice President Kamala Harris instead.
According to stock trading platforms, US stock futures started the week in the green, with the S&P 500 up 0.5% and the Nasdaq up 0.9%, after the two major indices posted their worst weekly performance since April. According to trading, Dow Jones futures rose about 50 points.
Traders are assessing the political situation in the United States after President Joe Biden ended his re-election bid and endorsed Vice President Kamala Harris as the Democratic candidate. However, Donald Trump continues to lead the presidential race. Meanwhile, the technology sector rebounded from Friday’s losses with gains in Microsoft (0.7%), Apple (1.2%), Nvidia (2.1%), Amazon (1.2%), Meta (1.6%) and Alphabet (1.5%). In pre-market hours. On the earnings front, Verizon shares fell about 3.7% before the opening bell after the company’s earnings disappoint. It will be a big week for earnings, with Microsoft, Alphabet and Tesla set to report earnings.
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USD/JPY Technical Analysis and Expectations Today
USD/JPY remains on a downward correction path and if news of continued Japanese intervention in the forex markets increases, the USD/JPY sell-off will continue and the next important support will be 154.50. Which confirms the strength of the current downward channel. Conversely, based on the daily chart below, the psychological resistance at 160.00 remains key to confirming a strong bullish control. The USD/JPY rate will continue to be influenced by central bank policy directions and any news of Japanese market intervention, alongside investor risk appetite.
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