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USD/JPY falls toward 156 as GPIF speculation boosts yen
Speculation that Japan’s roughly $2 trillion GPIF could increase domestic bond holdings comes as the 10-year JGB yield has climbed about 1.0 percentage point since March and briefly topped 3.0% this week.
USD/JPY broke decisively through 157.99, falling to around 156 and bringing the 155 area back within reach, as the yen rally gained momentum on speculation involving Japan’s Government Pension Investment Fund, GPIF. Action Forex said the renewed focus is on whether GPIF could raise its domestic bond allocation, adding to a broader yen-positive repricing already underway after an increasingly hawkish Bank of Japan shift.
The GPIF angle centers on an unusual management committee meeting on August 21, its first August meeting since 2019, and a review of its basic portfolio plan after a March assessment said a review was unnecessary. Current targets include a 25% allocation to domestic bonds, alongside 25% each for domestic equities, foreign bonds, and foreign equities, and markets are watching for any move that would increase domestic holdings, particularly government bonds.
Action Forex noted the timing is also tied to market repricing of Japanese rates, with Japan’s 10-year government bond yield up about 1.0 percentage point since March and briefly reaching 3.015% this week, the highest level since 1996. Higher domestic yields have already reduced the relative attractiveness of overseas bonds for Japanese investors, and a larger GPIF domestic allocation could reinforce that repatriation dynamic.
At the same time, Brent rose to an intraday high around $97.62, its strongest level in six weeks, as the US-Iran conflict shows signs of extending beyond 2026. The outlet said that combination would normally be dollar-supportive through inflation and rates, but on the day Japan is driving the currency direction.
Latest closeBrent $95.32 ▲0.7%|USD/JPY 158.82 ▼0.9%