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USD/JPY holds below 160 as yen stays under pressure

USD/JPY traded around 159.3, with yen weakness linked to Japan’s expansionary fiscal policy and a wide interest-rate gap versus other economies.

Reported · Written up by our desk · Major Pairs

USD/JPY remained below 160.00 on Tuesday, extending a sideways move while the pair was last around 159.30. FXStreet said the yen underperformed major peers despite a softer US dollar.

The outlet attributed persistent yen pressure to Japan’s expansionary fiscal policy, high government debt, and a wide interest-rate gap versus other major economies. Expectations for further Bank of Japan tightening were also seen as offering limited support, even as markets fully priced a rate hike next month.

FXStreet pointed to upcoming catalysts for the dollar and the yen, including Japan’s Tokyo consumer price index data on Friday and the US personal consumption expenditures price index on Wednesday. It also cited a Jackson Hole Symposium speech by Federal Reserve Chairman Kevin Warsh on Friday as another key risk for expectations around Fed policy.

The piece added that the US dollar’s tilt to the downside followed a surprise US Treasury decision to increase buybacks of longer-dated government securities. FXStreet noted that markets were pricing about a 60.0 percent chance the Fed leaves interest rates unchanged in September, based on the CME FedWatch Tool.

Latest closeUSD/JPY 159.31 ▼0.1%

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