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Forex Today: Japanese Yen slumps to 40-year low against US Dollar

Here is what you need to know on Tuesday, June 30:

The Japanese Yen (JPY) trades at its lowest level in four decades against the US Dollar (USD) on the last trading day of the second quarter, with the USD/JPY pair climbing above 162.00. The economic calendar will feature preliminary June Consumer Price Index (CPI) data from Germany and the April Gross Domestic Product (GDP) growth data from Canada. Additionally, the United States (US) Bureau of Labor Statistics will publish the JOLTS Job Openings data for May and the Conference Board will release the Consumer Confidence report for June.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD-0.06%-0.23%0.31%0.27%0.21%-0.06%-0.11%
EUR0.06%-0.21%0.37%0.30%0.25%-0.05%-0.10%
GBP0.23%0.21%0.64%0.51%0.46%0.16%0.11%
JPY-0.31%-0.37%-0.64%-0.05%-0.11%-0.28%-0.45%
CAD-0.27%-0.30%-0.51%0.05%-0.06%-0.23%-0.31%
AUD-0.21%-0.25%-0.46%0.11%0.06%-0.29%-0.34%
NZD0.06%0.05%-0.16%0.28%0.23%0.29%-0.07%
CHF0.11%0.10%-0.11%0.45%0.31%0.34%0.07%

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

In the early trading hours of the Asian session, USD/JPY broke above 162.00 and hit its highest level since 1986. Although the pair corrected lower toward 162.00 later in the session, it regained its traction in the European morning and was last seen trading near 162.30. Japan’s Finance Minister Satsuki Katayama said on Tuesday that the government will respond appropriately to currency moves at any time as needed. Similarly, Japan’s Chief Cabinet Secretary Minoru Kihara reiterated during a regularly scheduled press conference that officials are always ready to take necessary action on forex. Kihara, however, refrained from commenting on a specific forex level. The data from Japan showed that the Unemployment Rate held steady at 2.5% in May as expected.

The US Dollar (USD) gathers strength against its rivals early Tuesday, with the USD Index rising toward 101.50 after closing in negative territory on Monday. Contradicting headlines surrounding the next round of US-Iran talks seem to be causing markets to stay away from risk-sensitive assets. US President Donald Trump said on Monday that Iran has requested a meeting following the exchange of strikes over the weekend and noted that it will take place in Qatar on Tuesday. Iran's Foreign Ministry, however, explained that the delegation will travel to Doha to follow up on the release of frozen funds and said that there is no plan to meet with the US' negotiators.

EUR/USD started the week on a bullish note and gained more than 0.3% on Monday. In her opening remarks delivered at the European Central Bank (ECB) Forum on Central Banking on Monday, ECB President Christine Lagarde said that they are likely to face shocks in coming years that would push inflation away from the target and noted that Europe's resilience would allow them to raise rates without concerning about it becoming a source of financial stress. Early Tuesday, EUR/USD stays under bearish pressure and trades slightly below 1.1400.

GBP/USD rose nearly 0.5% on Monday and reached a fresh weekly high above 1.3260. The pair corrects lower and fluctuates in a narrow channel at around 1.3230 in the European morning on Tuesday. The UK's Office for National Statistics reported that the GDP expanded by 0.6% on a quarterly basis in the first quarter, matching the advanced estimate and the market expectation.

Gold failed to build on the recovery seen toward the end of the previous week and lost more than 1.5% on Monday. After touching its lowest level since November below $3,950 in the Asian session on Tuesday, XAU/USD staged a rebound and was last seen trading marginally lower on the day near $4,000.

AUD/USD edges lower and trades at a new three-month low below 0.6880 early Tuesday. The Reserve Bank of Australia's (RBA) minutes of its June monetary policy meeting showed that policymakers are ready to tale necessary steps to ensure price stability, including potential rate hikes.

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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