JPY down against basket of G7 currencies

[MongiIG]

As most central banks continue to drive higher rates, the one outlier is the Bank of Japan which is boosting purchases of Japanese bonds. IGTV’s Jeremy Naylor looks at long USD/JPY, EUR/JPY, CAD/JPY, AUD/JPY and GBP/JPY.

 

 

 Jeremy Naylor | Writer, London | Publication date: Wednesday 07 September 2022 

BoJ the outlier

In the context of global policy tightening, the Japanese yen continues to be the area of the market that is being beaten up against the whole basket of currencies ss the Bank of Japan (BoJ) remains convinced its ultra accommodative stance to support the Japanese economy by buying Japanese Government Bonds (JGBs).

And of course, in the face of a stronger US dollar we've seen the BoJ see its currency drop against the whole basket of other currencies around the world. This is causing all sorts of concerns for the Bank ahead of the Beige Book tonight. Fed Fund futures imply a 75-basis point hike at the Fed's next meeting. Now, this is pushing the Japanese yen down heavily against the US dollar.

USD/JPY chart

This is the dollar rising to new 24-year highs against the Japanese yen - a really big move up yesterday for the dollar on this move up in US Treasury yields ahead of the Fed meeting next week.

We've currently tipped over the 144 level. This is the highest point we have seen since 1998 and it continues to move up.

CAD/JPY

In the context of the Canadian Central Bank meeting today, the Canadian dollar may be suffering against the US dollar, but yesterday we saw a beat of the highs we saw back on the 21st of July. And for the Canadian currency this is the highest that we've been here since these levels back here since March 2008.

EUR/JPY

And it doesn't stop there either because other currencies are also far stronger against the Japanese yen.

The euro, which is having all sorts of problems of its own because of the eurozone crisis with energy, is finding it difficult to make any headwind against major currencies apart from the Japanese yen. Yesterday we approached these highs we saw back in the 21st of July. Today we've now seen a new punch higher to new 9-week highs almost against the Japanese yen for the euro. So it's now broken that resistance - it trades at 10-week highs ahead of the European Central Bank (ECB) interest rate decision tomorrow.

AUD/JPY and GBP/JPY

And the markets continue to see other areas where we're seeing other currencies move up not too far away from the highs that we've got.

Against the Aussie dollar you can see we're now challenging this line of resistance at 9688 for the Aussie, rising against the Japanese yen, and indeed sterling which is suffering so much against the yen, moving up there to 16546.

So all major currencies beating the Japanese yen.