Week in review

The USD/JPY opened the week at 159.19. The pair slipped below 159 during Tokyo and European trading on 17 August before reversing course as US economic data improved and oil prices rose. It continued to edge higher the following day, reaching a high of 159.78. The pair subsequently struggled to extend gains as 160 emerged as a psychological resistance level amid continued caution over possible intervention by the Japanese authorities. It gradually fell back toward 159 during Tokyo trading on 19 August before the US Treasury announced plans to expand UST buybacks from September. The announcement triggered broad-based dollar selling, pushing the USD/JPY to a low of 158.03 early in Tokyo trading on 20 August. The pair avoided a break below 158 and rebounded as UST yields recovered, returning to above 159 and erasing the previous day's decline. However, it was top-heavy around 159 at the time of writing on 21 August (Figure 1). The dollar weakened against the major currencies this week, partly in response to the US Treasury announcement. The yen also weakened broadly outside the USD/JPY, with EUR/JPY rising above 185 for the first time since 31 July (Figure 2).

FIGURE 1: USD/JPY

Note: As at 13:00 JST on 21 August
Source: EBS, Refinitiv, MUFG

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

Note: As at 13:00 JST on 21 August
Source: Bloomberg, MUFG