The USD/JPY continued its gains from Friday as Tokyo opens on Monday. Yesterday, the yen pair fell from a 24-year high, but today it goes back up. This is because Japan stepped in to protect its currency.
Thursday, when Japan’s top currency diplomat said that they traded in the FX market, the price of USD/JPY dropped significantly. He said that the government “took serious action in FX.”
Strong US PMIs, rising tensions between Russia and Ukraine, and hawkish central bankers outside the BOJ make USD/JPY buyers feel good.
On Friday, the US S&P Global PMIs for August were made public. The Manufacturing PMI went from 51.5 to 51.8, and the Services PMI went from 44.6 to 49.3.
Ukraine’s President Zelenskiy told CBS, “Putin’s nuclear threats were just bluffs before, but now they could come true.” After Russia’s foreign minister said that Ukrainian regions would be fully protected if they were taken over, the US said there would be “catastrophic consequences” if Moscow used nuclear weapons in Ukraine.
Wall Street ended in the red because rates helped the US dollar keep going up in the face of aggressive talk from the Fed and a rate hike. The futures for the S&P 500 go down a little, and the rates on 10-year Treasury bonds go up to 3.74 per cent.
Conclusion
On Tuesday and Wednesday, buyers of USD/JPY will pay attention to what Japan does and what Fed Chairman Jerome Powell says.