The yen rebounded on Friday after Japan's finance minister urged national pension funds to buy more domestic assets. The dollar fell from near JPY162.40 to JPY161.30, while Tokyo's stock and bond markets both rallied.
The recovery of the Japanese yen was the main feature against a softer US dollar, and it did not come from material intervention. Instead, Finance Minister Katayama called on national pension funds to increase investment in domestic assets, and a firm producer price reading added support. The dollar, which had traded near JPY162.40, was sold down to JPY161.30 before buyers stepped back in.
What moved the yen
The reaction spread across Tokyo markets. The Nikkei rallied 1.2%, and the 10-year Japanese government bond yield fell for the first time in two weeks. That 13 basis point decline was the largest single-day drop this year.
Japan's inflation data reinforced the shift. June producer prices rose 0.4%, lifting the year-over-year rate to 7.1% from a revised 6.6% in May. That marked the fourth consecutive monthly increase in the annual pace and the highest reading since early 2023.
Where USD/JPY sits now
The rebound had limits for those who trade USD/JPY. The dollar's low near JPY161.30 sat just above the week's trough set Monday near JPY161.20, and by the European morning it had recovered to about JPY161.85. Intraday momentum indicators point to scope for more dollar gains, with JPY162 marked as the initial hurdle.
The move fit a wider dollar retreat. Earlier in the week Japan reported a record current account surplus, yet the yen had found little traction until the finance minister's call, after which it came back bid.
Source: Investing.com
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