USD/JPY jumps above 144.00 as US Dollar gains ahead of US ADP Employment data
- USD/JPY climbs above 144.00 as the US Dollar gains ground on surprisingly upbeat US JOLTS Job Openings data.
- Trump’s attack on Fed’s independence has diminished the US Dollar’s credibility.
- The Japanese Yen underperforms amid pessimism over US-Japan trade deal.
The USD/JPY pair gains sharply to near 144.30 during the European trading session on Wednesday. The asset strengthens as the US Dollar advances ahead of the United States (US) ADP Employment data for June, which will be published at 12:15 GMT.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps to near 96.90. The DXY recovered sharply on Tuesday after sliding to near the February 2022 low around 96.40, following surprisingly upbeat JOLTS Job Openings data.
Investors will closely monitor the US ADP Employment data as few Federal Reserve (Fed) officials have expressed concerns over cooling labor market strength. Economists expect private employers to have added 95K fresh workers in June, significantly higher than 37K recorded in May.
However, the broader outlook of the Greenback remains weak as consistent criticism of Fed Chair Jerome Powell’s “wait and see” stance on interest rates by US President Donald Trump has dampened the US Dollar’s credibility.
Meanwhile, the Japanese Yen (JPY) underperforms across the board as Trump expresses concerns about closing deal with Japan before the July 9 tariff deadline. "We’ve dealt with Japan. I’m not sure we’re going to make a deal. I doubt it," Trump said while speaking with reporters at Air Force One on Tuesday.
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.27% | 0.41% | 0.49% | 0.04% | 0.21% | 0.32% | 0.19% | |
| EUR | -0.27% | 0.09% | 0.19% | -0.27% | -0.04% | 0.16% | -0.07% | |
| GBP | -0.41% | -0.09% | 0.12% | -0.38% | -0.18% | 0.04% | -0.20% | |
| JPY | -0.49% | -0.19% | -0.12% | -0.45% | -0.29% | -0.12% | -0.30% | |
| CAD | -0.04% | 0.27% | 0.38% | 0.45% | 0.19% | 0.40% | 0.17% | |
| AUD | -0.21% | 0.04% | 0.18% | 0.29% | -0.19% | 0.26% | -0.01% | |
| NZD | -0.32% | -0.16% | -0.04% | 0.12% | -0.40% | -0.26% | -0.23% | |
| CHF | -0.19% | 0.07% | 0.20% | 0.30% | -0.17% | 0.01% | 0.23% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
On the domestic front, the comments from Bank of Japan’s (BoJ) new board member Kazuyuki Masu stating that the central bank should not rush for interest rate hikes have also weighed on the Japanese Yen. Masu warns of persistent economic risks until a deal with Washington is struck.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
