USD/JPY pair hit the symbolic level. What do analysts say?
The U.S. dollar reached the crucial level of 150 yen for the first time since 1990 today. The struggling Japanese yen briefly plunged past 150 per greenback in early European trading. It exchanged hands at 149.7 yen per USD at last. The Japanese currency has been losing steadily for 11 consecutive sessions. Moreover, it has suffered 32-year lows for six straight sessions now.
On the other hand, Treasury yields skyrocketed to multi-year highs, bolstering the already rallying greenback. Markets are waiting for intervention from the Japanese government now, as the latter promised to support its currency if the Yen continued its losing streak.
Takumi Tsunoda, the senior economist at Shinkin Central Bank Research Institute in Tokyo, noted that until the investors remain unclear about the size of the next U.S. interest rate hike, the greenback’s strength won’t subside. Tsunoda also added that 150 was a passing point, and traders are now waiting to see if the pair tops 160.
On Thursday, the benchmark U.S. 10-year Treasury yield surged forward to 4.18%, hitting its highest level since 2008. At the same time, the two-year Treasury yields skyrocketed to a 15-year peak of 4.614%. This news boosted both the U.S. yields and the dollar higher, and the already declining yen was no match for the latter.
Market participants think the Federal Reserve will likely continue hiking interest rates. Inflation is still soaring in the United States, and the agency is determined to bring it down. However, the Japanese Yen is in the spotlight now, as well. Its government has already intervened recently to bolster the falling currency and may do that again.
What is the economists’ forecast?
Derek Halpenny, the head of research, global markets EMEA at MUFG, stated that the Ministry of Finance has been very clear that they would intervene in case of any disorderly price action. If the pair breaks clearly above 150, the markets may see some disorderly price action. The bank will probably act after that. However, it would take a sharp move in the USD/JPY pair to trigger another intervention.
Meanwhile, other major currencies were subdued during this session. The euro surged forward by 0.5% at $0.9826 today. It managed to recover some losses from the previous day. On the other hand, the British Pound remained weak due to turmoil in British politics.
