The yen lost a bit of ground against the US dollar in Thursday’s Asian trading. Still, it’s not all bad news for the yen. Traders are treading carefully these days, not eager to bet against the Bank of Japan. There’s real buzz about a potential rate hike in December. Governor Kazuo Ueda made it pretty clear—the central bank looks ready to tighten things up. On top of that, Japan’s private sector just logged its eighth month in a row of growth in November. That’s fueling expectations for more policy normalization before the year wraps up.
Japan’s economic outlook keeps getting brighter. Business confidence is up, and now everyone’s waiting to see if the BoJ finally lifts rates by 25 basis points to 0.75%. This buzz keeps the yen on solid ground, even as global investors turn away from safe-haven currencies.
Bond Yields Climb on Policy Hopes, While Weak US Data Weighs on Dollar
Japanese government bond yields increased, particularly at the longer end, as a result of Prime Minister Sanae Takaichi’s new spending plans and tighter discourse. The gap between Japanese and foreign rates is narrowing due to higher yields, which may provide additional support for the yen in the coming days.
In the meantime, this isn’t the best week for the US dollar. Fewer people got hired last month than expected, so Wall Street’s betting less on rate cuts soon. The latest job numbers showed companies axed 32K positions in November, sparking more talk that the economy might be cooling faster than thought. That slump made investors nervous—now they’re wondering if the Fed will act fast enough.
USD/JPY: What to Watch
Near the 100-hour SMA, USD/JPY sits under 155.70 – should it climb past 156.00, a push toward 157.00 might follow. But if sellers take charge, dragging the price below 155.00, look for drops into the mid-154s.
