The Japanese Yen (JPY) fell against the US Dollar (USD) at the start of the new week, reversing gains made in the previous session, returning to a five-month low.
Investors remain uncertain whether the Bank of Japan (BoJ) will continue to raise interest rates. In addition, the market's optimism and the widening yield gap between the US and Japan due to the high interest rate policy of the US Federal Reserve (Fed) have further weakened the Yen.
However, high inflation data from Japan released on Friday suggested that the BoJ could raise interest rates in January or March next year. Factors such as tensions from the Russia-Ukraine war, instability in the Middle East and concerns about a trade war could support the value of the yen. In addition, concerns that the Japanese government may intervene to protect its currency and the uncertain performance of the US dollar also made investors hesitant to sell off the JPY.
Last week, the BoJ decided to keep interest rates unchanged without giving a clear indication of when it might raise them. This sent Japanese government bond yields falling to a one-month low, while US bond yields rose to a six-month high, weakening the yen.
Still, the report showed that inflation in Japan rose sharply in November, opening up the possibility that the BoJ will raise interest rates as early as 2025. In the US, inflation has shown signs of easing, causing the dollar to lose momentum after reaching a two-year high.
In addition, personal income in the US increased at a slower pace in November, while consumer spending – an important factor in the US economy – increased slightly. Investors are now waiting for the US Consumer Confidence Index to find more trading opportunities during the Christmas week.
According to Lao Dong, updated at 1:00 p.m. on December 23, the USD/JPY exchange rate is currently fluctuating around 156.626 USD/JPY, meaning 1 USD can be exchanged for about 156.5 JPY.
Update the latest Yen exchange rate HERE.
