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USD/JPY slips as investors trim positions amid intervention risk
The yen is weighed by the Fed-BoJ policy gap, with Japan’s interest rate at 1% versus higher US rates, while July S&P Global PMI data points to about 2% annualized US Q3 GDP growth.
FXStreet reports USD/JPY edged lower on Friday, trading around 163.70, down 0.09% at the time of writing after the pair hit a fresh near 40-year high on Thursday.
The move reflects investors trimming some long yen positions amid renewed risk of intervention from Japanese authorities, even as the broader policy divergence between the Federal Reserve and the Bank of Japan continues to favor the US dollar.
FXStreet cites the US Dollar’s support from macro data, noting the preliminary S&P Global Composite PMI rose to 53.6 in July from 51.9 in June. The Services PMI improved to 53.6 and the Manufacturing PMI eased slightly to 53.8, a reading that Chris Williamson of S&P Global Market Intelligence said is consistent with around 2% annualized GDP growth in the third quarter.
The yen also remains under pressure due to Japan’s carry dynamics and inflation concerns, with the Bank of Japan having raised interest rates to 1% but borrowing costs still lower than other major economies. FXStreet adds that Japan’s June National CPI accelerated to 1.7% year over year from 1.5% in May, and it notes Reuters reporting that the BoJ is expected to hold rates while warning inflation could exceed its 2% target.
Latest closeUSD/JPY 163.84 ▲0.4%