Week in review

The USD/JPY opened the week at 159.69. Dollar buying dominated early on 13 April after weekend talks between the US and Iran failed to produce a ceasefire agreement. The pair then strengthened to this week's high of 159.86 as WTI crude rose above USD105. However, hopes for continued negotiations remained firm, and neither higher oil prices nor dollar buying lasted. Financial markets instead became less risk averse, bringing back the same dollar-selling, yen-selling pattern seen last week. The USD/JPY then fell back to the upper 158 range by 14 April. The pair briefly dropped to a low of 158.27 on 16 April after the G7 finance ministers and central bank governors' meeting, with markets focusing on remarks by Finance Minister Satsuki Katayama and Vice Minister of Finance for International Affairs Atsushi Mimura on close Japan-US coordination on exchange rates. However, yen buying did not last, and the pair soon rebounded as remarks by Katayama and others also helped push BOJ rate hike expectations lower. The USD/JPY subsequently recovered to the lower 159 range. Markets were also focused on BOJ Governor Kazuo Ueda's press conference on 17 April, but he did not signal any clear willingness to push ahead with rate hikes, leaving the yen slightly softer at the time of writing (Figure 1). Both the dollar and the yen were sold among G10 currencies again this week. The EUR/JPY rose to a fresh record high, while the AUD remained strong as rate hikes are already under way, pushing the AUD/JPY above its March high into the 114 range (Figure 2).

FIGURE 1: USD/JPY

Note: As at 13:00 JST on 17 April
Source: EBS, Refinitiv, MUFG

FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK

Note: As at 13:00 JST on 17 April
Source: Bloomberg, MUFG