JPY poised to record best weekly performance in more than a year, USD declines

The yen is poised to achieve its most impressive weekly performance in over a year on Friday, propelled by suspected intervention from Tokyo earlier in the week to prevent the Japanese currency from reaching its lowest levels in 34 years. This move has led to a general decline in the dollar.

During Asian trading, the yen surged to its highest level of the session at 152.75 against the dollar. It is anticipated to conclude the week with a 3.5% increase, marking its largest weekly gain since December 2022. In the latest trading session, the Japanese currency strengthened by 0.4% to reach 152.97 against the dollar.

Market participants are closely monitoring for any significant fluctuations in the yen following suspicions of Tokyo’s intervention to bolster its currency this week, with estimates suggesting intervention worth up to 9.16 trillion yen ($59.8 billion), as per data from the Bank of Japan.

The dollar, on the other hand, has experienced losses against most major currencies and is on track to record its poorest weekly performance in almost two months, partly due to the substantial rise in the yen throughout the week.

Investors are eagerly awaiting the release of non-farm payrolls data in the United States later on Friday, which is expected to influence the dollar’s next moves.

Federal Reserve Chairman Jerome Powell indicated this week that the central bank’s next move regarding interest rates is more likely to be a reduction rather than an increase, contrary to some fears.

The Federal Reserve, as anticipated, maintained interest rates unchanged at the conclusion of its two-day monetary policy meeting and signaled a continued inclination towards a potential cut, albeit possibly taking longer than previously anticipated.

In currency markets, the euro edged up by 0.08% to $1.0733 in the latest trading session, heading for a weekly gain of approximately 0.4%. The British pound also strengthened by 0.12% to $1.2551, set for a weekly increase of over 0.4%.

The dollar index, which measures the performance of the US currency against a basket of six major currencies, declined by about 0.06% to 105.24. The dollar is encountering challenges in resuming its upward trajectory following less hawkish comments from the US Central Bank, contrary to expectations. The dollar index is on course for a weekly loss of approximately 0.8%, marking its worst performance since March.

Elsewhere, the Australian dollar climbed by 0.14% to $0.6575, poised to achieve gains of more than 0.6% for the week. Similarly, the New Zealand dollar rose by 0.13% to $0.59695, moving towards a weekly gain of 0.5%.