Investors’ attention at the beginning of Thursday’s stock market session is focused on the Japanese yen. The Japanese currency is gaining significantly in value and is breaking below an important support point, which may indicate a breakdown in the upward trend on the USDJPY pair so far.
Interestingly, however, these movements are not dictated by any information/news that could cause such a sudden behavior of the currency. However, an aspect worth noting is the spread in yields between 10-year US and Japanese debt securities, which as a correlated indicator has been putting pressure on this currency pair for some time.
The Bank of Japan (BOJ) is expected to raise interest rates again this year, probably in the third quarter, raising the reference rate to 0.75%. Until then, rates are to be maintained unchanged. Much will depend on wage growth, which is a key aspect in the decision-making process on changing monetary policy. A Reuters poll today showed the median forecast for a pay rise in this year’s labor talks is 5.0%, up from 4.75% in January.
USDJPY briefly broke below the 150.00 barrier today for the first time since December 2024. From a technical perspective, the pair is in a technical downtrend. Source: xStation
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