Week in review
The USD/JPY opened the week at 150.88. The pair fell below 150 soon after European players entered the market, but yen cross rates rose due to increased risk tolerance as an emergency meeting of leaders in Europe increased expectations of greater support for Ukraine, driving the USD/JPY up to 151.30. However, the pair fell back below 150 after the US ISM manufacturing index missed market expectations and US President Donald Trump announced that tariffs on Mexico and Canada would be imposed from 4 March and criticized the weak yen. This trend continued on 5 March, with the USD/JPY falling below 149 along with a sharp fall in the Nikkei 225. The pair looked to test a break below 148 after European investors entered the market, but rebounded above 150 by the morning session in Tokyo following reports that the US might ease tariffs on Canada and Mexico. BOJ Deputy Governor Shinichi Uchida’s speech was closely watched, but did little to move the market as it did not include hints of an early additional rate hike or any mention of the terminal rate. However, the USD/JPY fell to around 148.50 amid dollar selling as the euro strengthened during European hours, and after the ADP employment report released in US time fell short of expectations. The USD/JPY remained firm around this level, but then dropped to a low for the week of 147.31 on 6 March in European trading hours as the yen strengthened across the board after Rengo announced it had requested wage increases of over 6% in the spring wage negotiations and due to a pickup in dollar selling amid a fall in European and US share prices. The USD/JPY briefly recovered to around 148 on 7 March, but at the time of writing it had been pushed down to around 147.50 (Figure 1). The dollar weakened across the board this week among G10 currencies. The euro and other European currencies were strong, with the yen sitting in the middle of the pack (Figure 2).
FIGURE 1: USD/JPY
Note: Through 13:00 JST on 7 March
Source: EBS, Refinitiv, MUFG
FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK
Note: Through 13:00 JST on 7 March
Source: Bloomberg, MUFG
