The Yen rises on BoJ minutes, with Ueda and US NFP on the Friday docket

USD/JPY is back under 158.00, where it was before Tuesday's jump toward 159.00.
Minutes from the BoJ added to December hike bets, and US tech stocks fell.
US payrolls and a speech by BoJ Governor Ueda are both scheduled for Friday.

The Yen is gaining on a Dollar that is up against the Pound, the Euro, the Kiwi and the Aussie on Thursday. Bank of Japan (BoJ) minutes that read as a case for a December hike did it, with help from a fall in US technology stocks. USD/JPY has dropped from Tuesday's high just under 159.00, its highest since mid-October, to just above 157.50.

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The BoJ held at 1.25% on October 30 by eight votes to one, with BoJ board member Takata wanting 1.5%, and it meets next on December 17-18. Thursday's minutes landed on that split, and the gap to the Fed's 3.75%-4.00% is two and a half points or more. A December BoJ hike would trim it by a quarter-point, if the Fed stands still.

The Fed is priced near 70% for December 9, and Cleveland Fed President Hammack, who voted to hike on October 28, said on Thursday that policy has to become restrictive. A hike in Washington on December 9 and one in Tokyo on December 18 would leave the gap exactly where it is. US technology stocks fell on Thursday too, which is the other reason the Yen is up.

On the calendar

September labour cash earnings for Japan come at 23:30 GMT on Thursday, forecast up 3.8% from a year earlier, the same as August. BoJ Governor Ueda speaks at 16:00 GMT on Friday, and both feed the December 17-18 decision, the BoJ's last of the year.

Friday's 13:30 GMT release of October Nonfarm Payrolls (NFP) is forecast to show a 65K rise after 29K in September. New York Fed President Williams has a speech at 09:30 GMT the same day. October's Consumer Price Index (CPI) comes on Tuesday, November 10, at 13:30 GMT, with a 0.3% forecast after 0.6%, and feeds the Fed's December 8-9 meeting.

On the charts

The pair is back inside the 156.00-159.00 range it has held since late September, and Tuesday's high was the latest turn lower from just under 159.00. The 50-day Exponential Moving Average (EMA) and the 200-day EMA are both within a quarter-Yen of 158.00, and USD/JPY is trading just below them.

USD/JPY daily chart

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

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