USD/JPY Drops After Japanese Wage Rise

The USD/JPY pair concluded Monday’s trading in a downward trend, influenced by a decline in U.S. Treasury yields, to which it is positively correlated in price movement in financial markets. The Japanese currency also benefited during the first trading day of the new week from increasing expectations of further interest rate hikes by the Bank of Japan.

The USD/JPY fell to 147.26 compared to the previous daily close of 148.03. The pair rose to its highest level on Monday’s trading day at 147.94, compared to its lowest level in the same period at 146.62.

Other factors contributed to the rise of the Japanese yen against the U.S. dollar, most notably the rise in wages reflected by Japanese data, which is one of the factors that could push the central bank towards a more tightening stance on monetary policy.

U.S. Treasury yields have been declining since the start of trading in the new week, affected by concerns of a looming government shutdown as the deadline approaches for U.S. lawmakers to reach an agreement on a budget plan to fund government activities.

U.S. Congress members have begun discussions aimed at avoiding a government shutdown by agreeing on temporary funding or successfully passing a budget plan to secure permanent funding for the operation of federal government institutions, which must be achieved by next Friday at the latest.