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Yen strengthens as Japan’s 10-year JGB yields hit a 30-year high

Japan’s 10-year government bond yield rose 8 basis points to 3.055%, while traders watched for potential further Japanese FX intervention.

Reported · Written up by our desk · Major Pairs

The Japanese yen strengthened against the US dollar, with USD/JPY easing toward 157.85 during Asian trading on Thursday, as market participants stayed alert for possible additional intervention from Japanese authorities. FXStreet said the yen move coincided with a jump in Japan’s 10-year government bond yield, which climbed 8 basis points to 3.055%, its level earlier in the day after US Treasury yields surged overnight. The backdrop also included the Bank of Japan raising its policy rate by 25 basis points to 1.25% last week, a decision marked as the highest since 1995, where two board members dissented.

Japan’s Finance Minister Satsuki Katayama said the principles on foreign exchange established since the coordinated Japan-US intervention remain in effect, reinforcing the idea that authorities are prepared to act. Markets are also pricing about a 30% chance, according to Bloomberg, that the BoJ will lift its benchmark short-term rate to 1.50% in October.

Separately, FXStreet noted that any hawkish tilt from the US Federal Reserve could support the dollar, including comments from Fed Governor Michael Barr that the Fed took an important step last week to recalibrate short term borrowing costs and may need additional rate hikes. Analysts cited in the report also pointed to links between geopolitics and market dynamics, including renewed discussion of the Japan-US alliance that they say now extends to the yen carry trade.

Latest closeUSD/JPY 158.21 ▲0.5%

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