USDJPY Slumps as Treasury Plans to Double Bond Purchases

The USDJPY pair weakened significantly yesterday by over 0.9% as it moved away from the key psychological barrier at the 160 level, currently oscillating around 158.5.

The decision to double the purchase of long-term US bonds by the US Secretary of the Treasury, Scott Bessent, led to an increased supply of dollars on the market, causing a depreciation of the US currency.

The yen was among the biggest beneficiaries of this move, with July inflation data from Japan scheduled for release on Friday expected at 12:30 AM.

An hour later, the August PMI data will be released. The leading indicator for Tokyo published at the end of July showed core inflation in the Japanese capital unexpectedly accelerated from 1.6% to 1.9% y/y, beating market consensus (1.7%).