Japanese Yen Weakens Against US Dollar on Higher Risk Sentiment

1,000 yenThe Japanese yen today weakened against the US dollar as the markets’ risk appetite increased given the positive performance of European and US equity markets, and the weak demand for the yen. Disappointing Japanese Business Sentiment Index (BSI) data released by the Ministry of Finance also increased the selling pressure on the yen.

The currency pair retraced much of yesterday’s losses during the European session as demand for the yen declined due to a higher risk sentiment in the markets. The pair traded above the crucial 110.00 psychological barrier for most of today’s session.

The US dollar’s rally against the Japanese yen was an isolated event given that the US Dollar Index was trading below its opening price for most of today. The IMM Net Speculators’ Positioning as at 06 June, 2017 indicated that the net shorts on the Japanese yen had increased in the past two weeks. The US dollar was also boosted by the producer price index (PPI) released by the Bureau of Labor Statistics, which remained the same in May, while the yearly rate was reported at 2.4% versus the expected 2.3%.

The Japanese Business Sentiment Index (BSI) released by the Ministry of Finance came in at -2.0 for Q2 of 2017 as opposed to Q1’s 1.3, which increased the selling pressure on the yen.

The currency pair’s future performance is likely to be determined by tomorrow’s FOMC rate decision, and the Bank of Japan‘s rate decision on Friday.

The USD/JPY was trading at 110.07 as at 16:43 GMT having risen from a low of 109.87. The EUR/JPY was trading at 123.27 having opened the day’s session trading at 123.07.

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