Forex News
Japan’s Finance Minister Satsuki Katayama said on Wednesday that the authorities will take necessary steps on the foreign exchange if necessary.
Key quotes
Declines to comment on specific forex levels.
Will take necessary steps on forex as required.
US-Iran situation has grown very challenging.
Market reaction
At the time of writing, USD/JPY is down 0.02% on the day at 163.15.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
On Wednesday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.7933 compared to the previous day's fix of 6.7917 and 6.7737 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- USD/JPY holds steady near a four-decade high amid a combination of supporting factors.
- The US-Japan rate gap and economic risks due to the Mideast conflict undermine the JPY.
- Fed rate-hike bets support the USD and spot prices, though intervention risks cap gains.
The USD/JPY enters a bullish consolidation phase during the Asian session on Wednesday and holds steady above the 163.00 mark, near its highest level since 1986 set the previous day. Traders, however, remain on high alert amid speculations that Japanese authorities will step in to prop up the domestic currency. This, in turn, is seen acting as a headwind for spot prices, though the supportive fundamental backdrop backs the case for an extension of the recent well-established uptrend.
Investors remain heavily focused on the wide rate differential between Japan and the US, which keeps the so-called carry trade active and has been a key factor behind the Japanese Yen's (JPY) relative underperformance. Apart from this, economic risks stemming from the continued fighting in the Middle East undermine the JPY. The US Dollar (USD), on the other hand, preserves its gains registered over the past four days and offers additional support to the USD/JPY pair, validating the positive bias.
The Bank of Japan (BoJ) has cautiously started to normalize policy and lifted the short-term policy rate in June to 1.00%, or the highest since 1995. The US Federal Reserve (Fed), on the other hand, is expected to hold its benchmark rate in a target range of 3.50% to 3.75% at the July policy meeting next week. This, however, still leaves a gap of around 250 to 275 basis points (bps), prompting traders to use the low-yielding JPY as a funding currency to finance purchases of higher-yielding assets.
Meanwhile, a cycle of tit-for-tat strikes between the US and Iran keeps the geopolitical risk premium in play, which, along with the closure of the Strait of Hormuz, adds to fresh uncertainty in global energy markets. Given that Japan relies on the critical waterway for over 90% of its Crude Oil imports, the developments raise concerns about Japan's economy and favor the JPY bears. Furthermore, energy-driven inflation risks bolster Fed rate-hike bets, supporting the USD and the USD/JPY pair.
There isn't any relevant market-moving economic data due for release from the US on Wednesday, leaving the Greenback at the mercy of comments from influential FOMC members. Apart from this, further developments surrounding the US-Iran saga might continue to infuse volatility in financial markets and drive the USD, providing some impetus to the USD/JPY pair. Nevertheless, the aforementioned factors suggest that the path of least resistance for spot prices is to the upside.
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.19% | 0.50% | 0.49% | 0.60% | -0.66% | 0.04% | 0.49% | |
| EUR | -0.19% | 0.29% | 0.24% | 0.40% | -0.85% | -0.15% | 0.29% | |
| GBP | -0.50% | -0.29% | -0.07% | 0.10% | -1.14% | -0.45% | 0.04% | |
| JPY | -0.49% | -0.24% | 0.07% | 0.19% | -1.10% | -0.50% | 0.10% | |
| CAD | -0.60% | -0.40% | -0.10% | -0.19% | -1.21% | -0.68% | -0.06% | |
| AUD | 0.66% | 0.85% | 1.14% | 1.10% | 1.21% | 0.70% | 1.19% | |
| NZD | -0.04% | 0.15% | 0.45% | 0.50% | 0.68% | -0.70% | 0.49% | |
| CHF | -0.49% | -0.29% | -0.04% | -0.10% | 0.06% | -1.19% | -0.49% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- Trump warned of retaliatory strikes against Houthis attempting to disrupt vital Saudi export routes.
- A Kuwaiti tanker attack highlights the ongoing vulnerability of shipping lanes in the Persian Gulf.
- Black Sea terminal attacks endanger the primary export corridor carrying the vast majority of Kazakh crude.
West Texas Intermediate (WTI) oil price gains ground for the second successive day, trading around $84.60 per barrel during the Asian hours on Wednesday. Crude oil prices surge as supply risks intensified across several key export routes, extending well beyond the Middle East.
In Washington, President Donald Trump dismissed the likelihood of imminent talks with Iran, warning of additional military strikes while pledging swift retaliation if Tehran-backed Houthi rebels in Yemen act on threats to disrupt commercial shipping through the Red Sea.
Throughout the ongoing conflict, the Red Sea has served as a vital alternative export corridor for Saudi Arabia. By rerouting a portion of its crude through cross-country pipelines to Red Sea ports, the kingdom has managed to lessen its reliance on the highly vulnerable Strait of Hormuz. However, security risks in the area remain severe; an attack on a Kuwaiti tanker carrying oil products through Hormuz served as yet another stark reminder of the persistent threats facing maritime traffic.
The energy market's vulnerabilities stretch beyond the Middle East as well. Traders are closely monitoring a series of drone attacks on the Caspian Pipeline Consortium terminal along Russia’s Black Sea coast, a critical hub that handles the vast majority of Kazakhstan’s crude exports.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- EUR/USD posts modest gains near 1.1405 in Wednesday’s early Asian session.
- Rising energy costs could rekindle inflation and strengthen the case for further ECB tightening.
- Trump minimized the prospect of immediate talks with Iran as the US attacks Iran for the 11th straight night.
The EUR/USD pair trades with mild gains around 1.1405 during the early Asian session on Wednesday. A hawkish tone from the European Central Bank (ECB) provides some support to the Euro (EUR) against the US Dollar (USD). Traders await the upcoming ECB interest rate decision on Thursday.
European government bonds rose across the board earlier this week as an enduring geopolitical oil shock and the looming threat of persistent inflation prompted investors to price in a more hawkish path for ECB monetary policy.
While the ECB is widely expected to hold its deposit rate steady at 2.25% at its July policy meeting on Thursday, money markets indicated the ECB deposit rate at 2.66% in December and 2.73% in February 2027, up from the current 2.25%. They also fully priced the interest rate increase in September, according to Reuters.
Meanwhile, US President Donald Trump minimized the prospect of immediate negotiations with Iran as the two sides exchanged strikes and Houthi militants in Yemen threatened shipping in the Red Sea. Trump vowed on Tuesday to respond if the Iran-backed group disrupted that waterway but didn’t specify how.
Iran's top joint military command said that Tehran will expand its strikes and target US and its allies' interests across the region if the US attacks Iran's nuclear sites, per the Xinhua news agency. Escalating tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the major pair in the near term.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Iran's top joint military command said that Tehran will expand its strikes and target the US and its allies' interests across the region if the US attacks Iran's nuclear sites, Xinhua news agency reported on Tuesday.
Iranian State TV reported that if the US attacks Iran's nuclear sites, it will be an expansion of war in the region.
The statement came after US President Donald Trump said that the US will be hitting the Pickaxe Mountain area “pretty soon.” The US Central Command (CENTCOM) said it launched an 11th night of strikes on Iran early Wednesday. Trump on Tuesday vowed to respond if Houthi militants in Yemen disrupted that waterway but didn’t specify how.
On Tuesday, a handful of oil tankers appeared to pause their journeys as they approached Yemeni waters heading into the Red Sea. The Iran-backed group sent an email to shipowners warning against calling at Saudi Arabia’s ports.
Early Wednesday, air defense activity reported in western, eastern and northeastern of Iran. East Azerbaijan authorities also reported US airstrike on military site near Tabriz.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 2.50% on the day at $84.35.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- Gold price recovers to near $4,080 in Wednesday’s early Asian session, up 1.80% on the day.
- The US and Iran exchanged strikes for an 11th straight day, boosting safe-haven flows.
- Traders weigh higher energy prices against soft US inflation data as they look for clues about the US interest rate path.
Gold price (XAU/USD) gains ground to around $4,080 during the early Asian session on Wednesday. The precious metal rebounds as safe-haven demand intensified globally after retreating to the $4,000 psychological level in the previous session.
Renewed military tensions between the United States (US) and Iran have injected high volatility into commodities, prompting traders to rotate capital back into safe-haven yellow metal. Additionally, analysts said that the buying comes with the macro backdrop largely unchanged. “Today’s move looks more like dip-buying than a response to new headlines,” said Ewa Manthey, commodities strategist at ING.
Traders continue to weigh escalations in the US-Iran war. The US Central Command (CENTCOM) has carried out its 11th consecutive night of strikes on Iran since US President Donald Trump declared the ceasefire “over,” while Tehran’s forces have struck US military assets across the Middle East and its Houthi allies have declared a maritime embargo against Saudi Arabia.
Markets will closely monitor Middle East tensions for signs that higher energy costs could stoke inflation, putting pressure on the Federal Reserve (Fed) to tighten policy. Swap traders see low odds of the Fed raising rates at its next meeting in July after softer US inflation data, although traders have fully priced in at least one hike by the end of the year.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
