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Yen weakens as rising oil and gas push USD/JPY above 163
MUFG says USD/JPY is trading above 163.0 year to date, as higher energy prices and rising yields outside Japan make the yen harder to support.
MUFG analyst Lee Hardman points to higher oil and natural gas prices as a driver of renewed Japanese yen weakness, noting that USD/JPY has pushed to fresh year to date highs above 163.00.
FXStreet reports that the backdrop is complicated by global yield moves, with Japanese policymakers facing a tougher environment because energy costs and rising rates abroad encourage further yen selling.
The note also says the Bank of Japan could consider a rate hike as soon as September, but that a single move may not be enough to reverse the weakening trend.
MUFG adds that the yen has underperformed alongside other low yielding G10 currencies since the US Iran conflict began in late February, and argues the yen would likely benefit more from an unwind of carry trades if the energy price shock destabilized global financial conditions.
Latest closeNat gas $2.883 ▲0.6%|USD/JPY 162.90 ▲0.3%