The Yen declined against the dollar once again last week, finishing the week trading over 155. Data releases were largely positive, with household spending and the Jibun Bank services PMI both growing. Average cash earnings missed expectations but did show a further increase of 0.6% in March. Comments by BoJ members, however, suggested a reluctance to intervene in the FX market again which put yet more pressure on the Yen. There is just a 34% chance priced in by markets of another 10bp rate rise in June by the BoJ, meaning the interest rate divergence between JPY and other major world currencies looks set to remain wide for the foreseeable.
Published on 15 May 2024
The Yen weakened against the dollar last week, surpassing 155, despite positive data on household spending and services PMI, while BoJ comments hinting at non-intervention increased pressure on the currency, with market pricing reflecting a low probability of a BoJ rate rise in June, indicating a continued interest rate gap between JPY and other major currencies.
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