Forex News
- USD/JPY turns lower for the second straight day following a modest Asian session uptick.
- A shift in Japan’s intervention tactics underpins the JPY and weighs on the currency pair.
- Receding Fed hike bets offset geopolitical risks and keep the USD bulls on the defensive.
The USD/JPY pair attracts fresh sellers following a modest Asian session uptick to the 161.50 region and turns lower for the second straight day on Friday. Spot prices currently trade around the 161.00 mark and seem poised to extend the corrective fall from the highest level since 1986, touched on Wednesday.
As investors digest June's softer US jobs data, persistent geopolitical uncertainties helped the safe-haven US Dollar (USD) move away from its lowest level since June 18, set on Thursday, and turned out to be a key factor supporting the USD/JPY pair. The New York Times reported that US officials feared Israel may be hatching a plan to kill two of Iran’s senior negotiators during indirect peace talks. US officials believed that any assassination attempt could derail negotiations and trigger renewed fighting. Adding to this, Iran’s military headquarters warned that any US interference in the Strait of Hormuz will be met with a “decisive and swift response.”
The USD bulls, however, seem hesitant amid receding US Federal Reserve (Fed) rate hike bets. The closely-watched US Nonfarm Payrolls (NFP) showed that the economy added 57K new jobs in June, far below the 110K expected. Adding to this, the previous month's reading was revised down from 172K to 129K, which pointed to softening labor conditions and offset a downtick in the Unemployment Rate to 4.2% in June. The crucial data shifted market expectations from one to two Fed rate increases in 2026 to between zero and one hike, which holds back the USD bulls from placing aggressive bets and keeps a lid on any meaningful appreciation for the USD/JPY pair.
Meanwhile, the Japanese Yen (JPY) might continue to draw support from a significant shift in Japan's intervention tactics. In fact, two sources familiar with the matter said on Thursday that Japanese officials are abandoning their habit of telegraphing intervention risks. Instead, they are shifting to a more targeted campaign to squeeze speculators and raise the cost of betting against the battered Japanese Yen (JPY). This injects a new element of uncertainty, which might continue to prompt a further adjustment in the JPY speculative positions and validates the near-term negative outlook for the USD/JPY pair amid thin liquidity on the back of a US holiday.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.45% | -1.14% | -0.42% | -0.11% | -0.59% | -0.99% | -0.88% | |
| EUR | 0.45% | -0.74% | 0.04% | 0.31% | -0.16% | -0.60% | -0.49% | |
| GBP | 1.14% | 0.74% | 0.82% | 1.06% | 0.57% | 0.14% | 0.25% | |
| JPY | 0.42% | -0.04% | -0.82% | 0.30% | -0.18% | -0.49% | -0.49% | |
| CAD | 0.11% | -0.31% | -1.06% | -0.30% | -0.49% | -0.79% | -0.71% | |
| AUD | 0.59% | 0.16% | -0.57% | 0.18% | 0.49% | -0.43% | -0.31% | |
| NZD | 0.99% | 0.60% | -0.14% | 0.49% | 0.79% | 0.43% | 0.09% | |
| CHF | 0.88% | 0.49% | -0.25% | 0.49% | 0.71% | 0.31% | -0.09% |
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).
Japan’s Finance Minister Satsuki Katayama said on Friday that officials are ready to act appropriately on currency fluctuations. However, Katayama decllined to comment on specific currency levels.
Key quotes
Won't comment on specific currency levels.
Ready to act appropriately on currency fluctuations.
To implement suitable economic policy, oversee developments.
Coordinating closely with US on forex, even during US holiday.
To pursue fiscal policy aimed at boosting market confidence amid rising JGB yields.
Specific monetary policies fall to BoJ.
Expect BoJ to implement suitable monetary policy in coordination with government.
Market reaction
At the time of writing, USD/JPY is down 0.01% on the day at 161.08.
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 Friday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.8047 compared to the previous day's fix of 6.8088 and 6.7808 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.
- GBP/USD gains ground to around 1.3350 in Friday’s early Asian session.
- US job growth slowed sharply in June.
- Markets see a 90% chance of a BoE hike by year-end.
The GBP/USD pair trades with mild gains near 1.3350 during the early Asian trading hours on Friday. The US Dollar (USD) edges lower against the British Pound (GBP) on a weaker-than-expected US Nonfarm Payrolls (NFP) report. The US markets will be closed on Friday in observance of Independence Day.
The US NFP rose by 57,000 in June, falling short of expectations of 110,000, the US Bureau of Labor Statistics (BLS) showed on Thursday. The Unemployment Rate fell to 4.2% during the same period, down from 4.3% in May. That followed a report on Wednesday showing that US private payrolls increased less than expected in June.
These reports suggested a cooling labor market and prompted financial markets to dial back expectations for a near-term interest rate hike from the US Federal Reserve (Fed). Financial markets are now pricing in nearly a 52% probability of a US rate hike by September, down from 66% before the jobs data, according to the CME FedWatch tool.
Traders will closely monitor the developments surrounding UK politics since Keir Starmer stepped down last week. Natixis analysts said while Burnham's commitment to fiscal discipline offers near-term support, markets will closely monitor future budgets for any signs that fiscal rules are being relaxed to finance higher public spending.
The Bank of England (BoE) will meet later this month to discuss monetary policy, and economists predict there will be no change in interest rates. Money markets show traders see a 90% odds of a BoE hike by the end of this year, per Reuters.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
- WTI declines as US-Iran diplomatic breakthroughs eased supply fears and restored commercial shipping through the vital Strait of Hormuz.
- Doha talks significantly lowered the geopolitical risk premium that previously kept energy prices elevated.
- Saudi crude exports rebounded to ninety percent of pre-war levels as more tankers successfully navigated the recovered Strait of Hormuz.
West Texas Intermediate (WTI) oil price inches lower after registering modest gains in the previous day, trading around $68.40 during the Asian hours on Friday. The global energy market is experiencing a notable cooling period as geopolitical tensions in the Middle East begin to ease.
Crude oil prices decline following a series of diplomatic breakthroughs between the United States (US) and Iran. Recent negotiations in Doha, facilitated by mediators from Qatar and Pakistan, have significantly lowered the geopolitical risk premium that previously kept energy prices elevated.
Oil prices ease as the steady recovery of commercial shipping through the Strait of Hormuz. As one of the world's most critical maritime chokepoints, any instability in this waterway directly impacts global oil distribution. The stabilization of the region has allowed commercial tankers to resume transit with confidence, signaling to global markets that regional oil supplies are gradually normalizing after a prolonged period of uncertainty.
Major regional producers are rapidly restoring their export capacities. Saudi Arabia’s crude exports have rebounded to approximately 90% of their pre-war levels as more tankers successfully navigate the waterway. Simultaneously, the United Arab Emirates has managed to bring its oil exports entirely back to pre-war volumes. The UAE achieved this by discreetly routing tankers through the Strait while also heavily relying on its strategic pipeline that bypasses the chokepoint entirely, ensuring a steady flow of crude to international buyers and further stabilizing global energy markets.
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 drifts lower to around 1.1420 in Friday’s early Asian session.
- Traders reduce their bets on ECB rate hikes after softer Eurozone inflation data.
- US Nonfarm Payrolls missed expectations, rising by 57,000 in June.
The EUR/USD pair declines to around 1.1420 during the early Asian session on Thursday, pressured by a soft Eurozone inflation outlook. The US Dollar (USD) strengthens against the Euro (EUR) despite disappointing US June labor data. European Central Bank (ECB) President Christine Lagarde is scheduled to speak later on Friday.
Eurozone headline CPI cooled more than expected, falling to 2.8% YoY in June from 3.2% in May, Eurostat revealed on Wednesday. The core inflation dropped to 2.4% YoY in June from 2.6% in the previous reading. This report has reduced pressure on the ECB to maintain a highly aggressive interest rate stance, weighing on the shared currency. Financial markets see a one-in-three chance of a rate hike in July, but a move by October is fully priced in, according to Reuters.
ECB policymakers and Maltese central bank chief Alexander Demarco said on Wednesday that the central bank should not rush into any further rate hike given the unexpectedly quick retreat in oil prices. Meanwhile, Lagarde stated that the ECB was correct to raise interest rates last month, adding that the central bank is paying close attention to the risk of second-round effects, even though they have not materialized so far.
On the other hand, the downbeat US Nonfarm Payrolls (NFP) data might undermine the Greenback and cap the downside for the major pair. The US economy added 57,000 jobs in June, below the market consensus of 110,000, the US Bureau of Labor Statistics (BLS) showed on Thursday.
Additionally, the Unemployment Rate fell to 4.2% during the same period, down from 4.3% in May. That followed a report on Wednesday showing that US private payrolls increased less than expected in June.
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.
United Overseas Bank’s (UOB) Quek Ser Leang reports USD/CNH is consolidating after a prior decline to 6.7865, with prices oscillating between 6.7911 and 6.8025 and closing at 6.7948. He expects intraday action to remain confined to 6.7860–6.7990. Over 1–3 weeks, recent Dollar strength is seen as having ended, with the pair likely to trade between 6.7750 and 6.8080, while medium-term recovery requires a break above the 21‑week EMA at 6.8430.
Off highs and stuck in a band
"24-HOUR VIEW: Two days ago, USD dropped to 6.7865 and then rebounded. When it was at 6.7920 yesterday, we highlighted that “the rebound from oversold conditions suggests USD is unlikely to weaken much further,” and we expected USD to “trade between 6.7860 and 6.7990.” USD then traded within a range of 6.7911/6.8025, closing little changed at 6.7948 (+0.05%). The price action provides no fresh clues, and we continue to expect USD to trade between 6.7860 and 6.7990."
"1-3 WEEKS VIEW: Yesterday (01 Jul, spot at 6.7920), we highlighted that the recent USD “strength has come to an end.” We also highlighted that USD “is likely to trade in a range between 6.7750 and 6.8080.” We continue to hold the same view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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.
