At the beginning of the new week, the Japanese Yen (JPY) depreciated against the US Dollar (USD), reversing the increase achieved in the previous session, returning to its lowest level in 5 months.
Investors are still uncertain whether the Bank of Japan (BoJ) will continue to raise interest rates. In addition, the optimistic market sentiment and the growing yield gap between the US and Japan due to the high interest rate policy of the US Federal Reserve (Fed) further weakened the Yen.
However, Japan's high inflation data released on Friday showed that the BoJ may 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 about the Japanese government's possible intervention to protect the domestic currency and the unclear developments of the USD have also made investors cautious about selling off the JPY.
Last week, the BoJ decided to keep interest rates unchanged and did not provide clear information about when it could raise interest rates. This caused Japanese government bond yields to fall to a one-month low, while US bond yields rose to a six-month high, depriving the Yen.
However, the report showed that inflation in Japan increased sharply in November, opening the possibility of the BoJ raising interest rates in early 2025. In the US, inflation has shown signs of easing, causing the USD to lose momentum after reaching a two-year high.
In addition, personal income in the US increased more slowly 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.
