Yen Hits 156.64 as Japan Markets Close for Holiday
The yen trades at 156.64 per dollar following a 2% weekly drop. Traders await potential intervention from Tokyo authorities.
Key points
- The yen traded at 156.64 per dollar after dropping 2% last week.
- The Bank of Japan raised rates to 1.25%, its highest level in 31 years.
- Traders price in a 55% chance of a Fed rate hike in October.
The yen traded at 156.64 per US dollar on Monday. This level follows a sharp 2% decline recorded over the previous trading week.
Japanese markets remained closed for a three-day public holiday. Low liquidity conditions kept traders alert for official intervention to support the currency.
Rate hike fails to boost yen
The Bank of Japan raised rates to 1.25% on Friday. This marks the highest level in thirty-one years for the central bank.
Investors were disappointed by two dissenting votes in the decision. The lack of explicitly hawkish guidance prevented a stronger yen response.
Nikkei reports indicate Japanese officials conducted rate checks with banks. Traders view this action as a precursor to direct currency intervention.
Global central banks signal further tightening
The Federal Reserve and European Central Bank also raised rates this month. Both institutions warned that additional tightening may be necessary to control inflation.
HSBC notes the Bank of Japan faces difficult messaging conditions. The Federal Reserve delivered a hawkish signal with its unanimous decision to hike.
Euro steady despite German election results
The euro held steady at 1.1482 dollars. The far-right AfD party took first place in northeastern German state elections.
ING economists link the political fragmentation to years of economic stagnation. They argue this division will make escaping stagnation harder.
