USD/JPY: Firm tone amid focus on overseas developments
Week in review
The USD/JPY opened the week at exactly 157.00. The broader financial market reaction remained limited after reports of a US attack on Venezuela over the weekend. The USD/JPY rose to this week's high of 157.29 after yen selling emerged amid a risk-on mood, including higher share prices, from the Tokyo morning on 5 January. The pair then lost momentum around that level and fell back to this week's low of 156.12 after dollar selling intensified following a weaker-than-expected US ISM manufacturing index released during US hours. The USD/JPY subsequently traded without clear direction around the 156 level for a time, before gradually edging higher toward the end of the week. The pair briefly recovered to the 157 level during US hours on 8 January after markets reacted positively to lower-than-expected initial jobless claims together with a sharp narrowing in the October US trade deficit. The USD/JPY was trading below 157.50 and posting fresh highs as at the time of writing on 9 January (Figure 1). The dollar strengthened broadly among G10 currencies this week. The Australian dollar was relatively firm after rate cut expectations receded, while the Swiss franc and Canadian dollar weakened amid geopolitical developments surrounding oil-producing Venezuela (Figure 2).
FIGURE 1: USD/JPY
Note: As at 14:00 JST on 9 January
Source: EBS, Refinitiv, MUFG
FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK
Note: As at 14:00 JST on 9 January
Source: Bloomberg, MUFG