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The Japanese yen slightly retreated against the dollar after reaching a six-week high.
The currency was supported this month by suspected intervention by Japanese authorities. Officials, including top currency diplomat Masato Kanda, hinted at potential intervention to prevent excessive currency moves.
Meanwhile, rising expectations that the Federal Reserve would cut interest rates in September, as supported by dovish comments from different Federal Reserve officials ,could limit the dollar’s gains.
Comments from US presidential candidate Donald Trump criticizing the strong US dollar and the weak yen and yuan also added traders’ concerns.
Japanese government bond (JGB) yields rose as investors adjusted positions amid concerns over a potential interest rate hike by the Bank of Japan later this month. The market is divided on the likelihood of a rate hike at the BoJ’s July 30-31 meeting, where the bank is expected to announce its JGB purchase tapering plans.
Looking ahead, the market awaits Japan’s inflation data for June, which is due tomorrow. In May, the inflation rate in Japan rose to 2.8% year-on-year from 2.5% in April, the highest since February. If June’s inflation remains high, it could support further appreciation of the yen and potentially higher JGB yields.
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