Japanese Yen Strengthens Against USD After Verbal Intervention
The Japanese Yen (JPY) strengthened slightly against its American counterpart after some verbal intervention from officials on Thursday and recovered some of its sharp overnight decline to its lowest level since July 31. Moreover, a slight decline in US Treasury yields triggered some profit-taking in the US Dollar (USD) and benefited the JPY. However, significant appreciation for the JPY seems elusive amid doubts over the Bank of Japan’s (BOJ) ability to raise interest rates further this year, fueled by the prospect of uncertainty surrounding the Japanese general election.
Furthermore, firming expectations for less aggressive policy easing by the Federal Reserve (Fed), coupled with concerns over deficit spending after the US election, should act as a tailwind for US Treasury yields and cap the lower-yielding JPY. Furthermore, signs of stability in equity markets could dent the JPY’s safe-haven status. This, along with the underlying strong bullish sentiment surrounding the US Dollar (USD), suggests that the path of least resistance for the USD/JPY pair is to the upside and supports prospects for some dip-buying.
Source: FXStreet
