FILE PHOTO: Coins and banknotes of Japanese yen are seen in this illustration picture taken June 16, 2022. REUTERS/Florence Lo/Illustration

Yen weakens as Japan continues shifting Currency Rhetoric

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Japanese Yen is going up and down in the spectrum. It trading on a softer note in Asian session as the rebound witnessed yesterday begins to lose steam.

The country’s Finance Minister, Shunichi Suzuki raised some interest among market observers. He said the ongoing weakening of Yen is partly due to two main things:
interest rate differentials
steering away from the customary practice of solely pointing fingers at speculative trading.

Currency experts are now awaiting to see if this expanded rhetoric will hold over time. There’s not much left for anyone to do.

The dangers

More significantly, the change in tone could potentially hint at BoJ mulling over the idea of moving away from its negative interest rate regime or could even suggest an acceptance of a further decrease in Yen’s exchange range. And that will be bad for the economy, even more.

As it was seen, the USD/CNH dips to as low as 7.2694 but quickly recovered. A head and shoulder top could be in the making (ls: 7.3491, h: 7.3679, rs: 7.3311).

Further decline in USD/CNH and decisive break of 7.2593 could mark the start of reversal to the whole up trend from 6.6971 (Jan low).

If materializes, the subsequent selloff could be steep and extra support could be give to AUD/USD for a take on 0.6500 near term resistance. Bad for the Yen? Maybe yeah…

Should this materialize, we could see a precipitous sell-off, potentially lending additional support to the AUD/USD, setting the stage for a challenge of the 0.6500 resistance in the near term.

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Where other markets in Asia are up, Japan 10-year JGB yield is down -0.0339 at 0.769.

Overnight, DOW rose 0.59%. S&P 500 rose 0.63%. NASDAQ rose 0.39%. 10-year yield rose 0.013 to 4.797.

But as experts believe, increases in real yields can arise from changes in investor’s attitudes toward risk and uncertainty

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