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Japanese Yen Pauses Advance as US Dollar Strengthens on Treasury Bond Buyback
Confirmed
In Short: The US Treasury announced it could buy back up to $6 billion of longer-dated debt, supporting the US Dollar and causing the Japanese Yen to pause its advance.
The US Treasury said it could buy back up to $6 billion of longer-dated debt on Thursday, above the previously indicated minimum of $4 billion per operation, according to reports.
USD/JPY remains on the back foot on Wednesday but lacks follow-through selling as the US Dollar recovers following the Treasury’s announcement of a larger bond buyback, with the US Dollar Index (DXY) trading around 98.80 after recovering from 98.60.
The US Dollar was the strongest against the Canadian Dollar, and US Treasury yields moved higher following the announcement, with the benchmark 10-year yield rising to around 4.85%, its highest level since November 2023.
Despite the technical and fundamental picture still favouring the Japanese Yen, the currency is receiving additional support from comments by US Treasury Secretary Scott Bessent, which have made market participants increasingly cautious about betting against the yen.
What's still developing
- The table below shows the percentage change of US Dollar (USD) against listed major currencies today.
- The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 98.80 after recovering from 98.60, its lowest level since August 21.
- The more important response must come from the BoJ, particularly through establishing a tightening cycle that extends well beyond September." "This week’s data confirming Japanese selling of U.S.
- Treasurys have had little immediate market impact, but the headline numbers underscore the risks to U.S.
- Bessent said he clearly understood what to expect from the Bank of Japan, particularly regarding when Japanese authorities are prepared to respond to excessive exchange-rate movements.
- USD/JPY fell to 153.50 on Wednesday, leaving the Japanese yen close to its strongest level in almost seven months.
- Expectations surrounding Japanese monetary policy are also supporting the yen.
- Meanwhile, sentiment among Japanese manufacturers improved for a second consecutive month in September, supported by resilient demand from the semiconductor and data-centre sectors.