USD/JPY rises above 143.00 as Japanese Yen underperforms across the board
- USD/JPY climbs slightly above 143.00 as Yen weakens on fears that Japan could face economic turbulence due to the fallout of the US tariff policy.
- BoJ’s Ueda warned that US tariffs could hurt domestic wage growth.
- Poor US private employment data weighs on the US Dollar.
The USD/JPY pair is up 0.25% to near 143.10 during European trading hours on Thursday. The pair trades firmly as the Japanese Yen (JPY) underperforms across the board. The Japanese currency faces a sharp selling pressure as Bank of Japan (BoJ) Governor Kazuo Ueda has warned that the United States (US) tariff policy could hurt domestic wage growth, a scenario that could delay central bank’s plans to raise interest rates in the near term.
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | -0.04% | 0.29% | -0.11% | -0.29% | -0.23% | 0.17% | |
| EUR | -0.06% | -0.04% | 0.25% | -0.14% | -0.34% | -0.35% | 0.14% | |
| GBP | 0.04% | 0.04% | 0.33% | -0.10% | -0.28% | -0.31% | 0.17% | |
| JPY | -0.29% | -0.25% | -0.33% | -0.42% | -0.63% | -0.61% | -0.12% | |
| CAD | 0.11% | 0.14% | 0.10% | 0.42% | -0.22% | -0.21% | 0.27% | |
| AUD | 0.29% | 0.34% | 0.28% | 0.63% | 0.22% | -0.03% | 0.49% | |
| NZD | 0.23% | 0.35% | 0.31% | 0.61% | 0.21% | 0.03% | 0.50% | |
| CHF | -0.17% | -0.14% | -0.17% | 0.12% | -0.27% | -0.49% | -0.50% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
On Tuesday, Kazuo Ueda warned that US tariffs could weigh somewhat on “Japanese companies' winter bonus payments and next year's wage talks with unions”, Reuters reported. However, Ueda expressed confidence that the “economic and wage growth would re-accelerate, and keep consumption on a moderate uptrend”.
About the monetary policy outlook, BoJ Ueda stated that interest rate hikes would become appropriate once officials get convinced that the economy and inflation will re-accelerate after a period of economic sluggishness.
However, the upside in the pair is expected to remain limited as the US Dollar (USD) struggles to gain ground due to disappointing US economic data for May, notable poor ADP Employment Change. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, appears vulnerable near the six-week low of 98.60.
On Wednesday, the ADP report showed that the private sector added 37K fresh workers, which were lowest since January 2021. Economists anticipated a robust hiring of 115K against 60K seen in April. Additionally, an unexpected decline in the Service PMI also battered the US Dollar.
Going forward, investors will focus on the US Nonfarm Payrolls (NFP) data for May, which will be released on Friday. The official employment data will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.