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24/06/24
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JPY Records Some Gains
On June 24, JPY recorded some gains, with USD/JPY trading at 159.39 around 1:25 pm (GMT), representing a 0.23 percent decline. The JPY has been losing on a daily basis over the past five days having fell by 1.5 percent last week.
The pair hit an intraday high of 159.85 June 21, a whisker away from its highest level in 34 years (160.23) which was attained on April 29. The significant move ensued after the Bank of Japan (BoJ) engaged in forex intervention of $62.2 billion to support the JPY from April 26 to May 29.
Major Japanese economic data from the previous week accompanied the JPY’s decline, with core-core inflation falling from 2.4% y/y in April to 2.1% y/y last month, representing its lowest pace of increase since September 2022.
On June 24, the Japanese Services Producer Price Index will be released while FOMC members Waller and Daly are expected to speak in the U.S. A BoJ policymaker said there should be a rate hike “without too much delay” while other members were more cautious about hiking rates, according to the apex bank’s summary of opinion.
The BoJ promised to release details of tapering its huge stimulus at its meeting next month and has not committed to higher rates. The Fed is still dealing with sticky inflation and signaling a rate cut in 2024, so it may be difficult for the JPY to gain some ground on the USD.
According to Japan’s major currency official Masota Kanda, “appropriate action” would be taken if there are “excessive moves based on speculation”. It seems the threat of intervention from the Japanese authorities is pulling JPY from breaking past 160 level.
Failure of the apex bank to implement some key changes in monetary policy may continue to sustain JPY’s weakness and possibly prompt currency intervention. A look at the chart of USD/JPY shows that there was move beneath two support levels, including 159.44 and 159.02. There is another support at 158.24. Conversely, there are two barrier levels to overcome, including 160.22 and 160.64.
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