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Japanese Yen slips as Oil lifts yields ahead of the Fed
Confirmed
In Short: The Japanese Yen has gained against a basket of major currencies, supported by rising oil prices and expectations of a more hawkish stance from the BoJ.
The Japanese Yen has strengthened against a basket of major and minor currencies, extending its gains against the US dollar for a fourth consecutive day. This strength is supported by the continued weakness of the US dollar, which has been bolstered by a sharp increase in oil prices. According to FXStreet, the firmer US Dollar is doing the work, helped by a significant jump in West Texas Intermediate (WTI) Oil that has pushed US Treasury yields higher.
FXStreet reports that strong Japanese wage and growth data have firmed bets on the normalization path of the BoJ, leading to a reduction in speculative positions against the Yen since the summer's intervention. The more important response, according to FXStreet, must come from the BoJ, particularly through establishing a tightening cycle that extends well beyond September. This week’s data confirming Japanese selling of US dollars further supports the Yen's strength.
Treasury Secretary Scott Bessent has warned about the potential impact of rising JGB yields and expected faster policy rate hikes in 2026–2027, which should support the Yen and domestic bond demand over time. Fitch Ratings adds that these rising yields and policy rate hikes should bolster the Yen and domestic bond demand. However, the Japanese Yen's gains are also attributed to the BoJ's normalization path, which is underpinning the currency and could limit USD/JPY's upside.
The Japanese Yen's strength is also reflected in the currency's performance against other major currencies, with the Japanese Yen rising against a basket of major and minor currencies in Asian trading on Thursday. The Yen is moving toward a retest of its seven-month high, supported by continued weakness in the US currency ahead of key inflation data in the United States.
What's confirmed
- The Japanese Yen has strengthened against a basket of major and minor currencies, extending its gains against the US dollar for a fourth consecutive day. This strength is supported by the continued weakness of the US dollar, which has been bolstered by a sharp increase in oil prices. According to FXStreet, the firmer US Dollar is doing the work, helped by a significant jump in West Texas Intermediate (WTI) Oil that has pushed US Treasury yields higher.
- FXStreet reports that strong Japanese wage and growth data have firmed bets on the normalization path of the BoJ, leading to a reduction in speculative positions against the Yen since the summer's intervention. The more important response, according to FXStreet, must come from the BoJ, particularly through establishing a tightening cycle that extends well beyond September. This week’s data confirming Japanese selling of US dollars further supports the Yen's strength.
- Treasury Secretary Scott Bessent has warned about the potential impact of rising JGB yields and expected faster policy rate hikes in 2026–2027, which should support the Yen and domestic bond demand over time. Fitch Ratings adds that these rising yields and policy rate hikes should bolster the Yen and domestic bond demand. However, the Japanese Yen's gains are also attributed to the BoJ's normalization path, which is underpinning the currency and could limit USD/JPY's upside.
- The Japanese Yen's strength is also reflected in the currency's performance against other major currencies, with the Japanese Yen rising against a basket of major and minor currencies in Asian trading on Thursday. The Yen is moving toward a retest of its seven-month high, supported by continued weakness in the US currency ahead of key inflation data in the United States.
What's still developing
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