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Euro advances as strong German IFO, cautious BoJ outlook weigh on Japanese Yen

  • EUR/JPY advances above 180.50, supported by stronger-than-expected German business sentiment data.
  • Germany’s IFO Business Climate Index rose to 89.9 in September, exceeding market expectations.
  • The Japanese Yen struggles to benefit from higher Japanese bond yields as doubts remain over further monetary tightening.

EUR/JPY trades higher around 180.55 on Thursday, gaining 0.19% on the day at the time of writing. The Euro (EUR) receives support from stronger-than-expected German business sentiment data, while uncertainty surrounding the pace of further monetary tightening by the Bank of Japan (BoJ) limits the Japanese Yen’s (JPY) ability to strengthen.

Germany’s IFO Business Climate Index rose to 89.9 in September from 88.8 in August, exceeding the market consensus of 89. The Current Assessment Index also improved to 89.5 from 88.5, while the Expectations Index climbed to 90.4 from 89, reaching its highest level since February.

On the Japanese side, Finance Minister Satsuki Katayama said on Thursday that the foreign-exchange principles established between Japan and the United States (US) remain in effect.

Meanwhile, Japanese government bond yields move higher. The 10-year Japanese Government Bond (JGB) yield rises by nearly 9 basis points to 3.071% at the time of press, reaching its highest level in 30 years after US Treasury yields advanced earlier.

The Bank of Japan raised its policy rate by 25 basis points to 1.25% last week, its highest level since 1995. However, the 7-2 vote highlighted divisions within the central bank, with board members Toichiro Asada and Ayano Sato dissenting. The disagreement raises uncertainty over the pace at which policymakers could deliver additional tightening.

BoJ Governor Kazuo Ueda’s comments following the decision also fell short of increasingly hawkish market expectations. Markets currently assign around a 30% chance to another rate increase, which would take the benchmark short-term rate to 1.5% in October, according to Bloomberg. The relatively limited expectations for an imminent follow-up hike prevent rising Japanese yields from translating into a stronger Japanese Yen, allowing EUR/JPY to remain supported above 180.50.

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD0.06%0.07%0.25%0.10%0.13%0.06%0.24%
EUR-0.06%0.00%0.18%-0.00%0.06%-0.02%0.16%
GBP-0.07%-0.01%0.17%-0.01%0.05%-0.03%0.15%
JPY-0.25%-0.18%-0.17%-0.19%-0.13%-0.24%-0.04%
CAD-0.10%0.00%0.01%0.19%0.05%-0.06%0.15%
AUD-0.13%-0.06%-0.05%0.13%-0.05%-0.09%0.10%
NZD-0.06%0.02%0.03%0.24%0.06%0.09%0.22%
CHF-0.24%-0.16%-0.15%0.04%-0.15%-0.10%-0.22%

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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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