Trump's Comments Boost Yen as Market Awaits BoJ Rate Expectations
Japan's yen has strengthened against all other G10 currencies, with the USDJPY pair down 0.4% to around 158. This comes after Japanese Finance Minister Satsuki Katayama revealed that Donald Trump expressed concern about the yen's weakness during a meeting in New York.
Katayama stated that she will continue to coordinate actions with her American counterpart, Scott Bessent, including on foreign exchange rates. Her remarks coincided with statements from Minoru Kiuchi, Minister for Economic Growth Strategy, who announced an end to the reflationary regime and a phase of rising prices and interest rates.
The market has been pricing in strong US PMI data, which showed exceptionally high figures consistent with GDP growth of around 5%. This has led to increased anticipation of a continuation of rate-hiking cycles in both the US and Japan. Investors are waiting for data or comments from BoJ officials that could lead to a repricing of interest rate expectations in Japan.
The risk of intervention increases as one of the most closely watched currency pairs rises further. The USDJPY pair has recovered its losses from September, with its current rate hovering around a tight cluster of moving averages. A breakout above this zone could open the path to the 78.6% Fibonacci retracement level and the psychological 160 level.