The Japanese yen weakened against other major currencies during the European trading session on Wednesday. European stock indices saw gains following news that Ukraine was open to accepting a U.S. proposal for a “30-day interim ceasefire” with Russia.
Additionally, the European Union revealed retaliatory tariffs on U.S. steel and aluminum imports, further influencing market dynamics.
Shortly after the ceasefire development, U.S. President Trump remarked, “Ukraine has agreed to the ceasefire. Now, we look to Russia, and hopefully, President Putin will concur.”
From an economic perspective, the Bank of Japan’s latest report showed that producer prices remained stable in February, with no change from the previous month. This outperformed expectations of a 0.1% decline and marked a slight improvement from January’s 0.3% drop.
On a year-over-year basis, producer prices rose by 4.0%, in line with predictions, though this was lower than the 4.2% increase reported in January. Meanwhile, Japan’s export price index increased by 0.5% month-over-month and 1.2% year-over-year, while the import price index grew by 0.5% on the month but contracted 1.6% year-on-year.
In other economic news, Japan’s Ministry of Finance released data revealing a dip in business sentiment among large companies in the first quarter. The Business Survey Index (BSI) for all industries dropped to 2.0 from 5.7 in the previous quarter, reflecting a broader decline in confidence.
Notably, the sentiment among manufacturers saw a sharper fall, with the index dropping to -2.4 from 6.3 in the prior period, while non-manufacturing sentiment also weakened.
In remarks on the bond market, Bank of Japan Governor Kazuo Ueda noted that the recent uptick in bond yields was a natural response to market expectations of potential interest rate hikes in the future.
Yen Weakens Across the Board
In European trading, the yen slipped to a nearly 1.5-month low of 162.06 against the euro and a 5-day low of 168.40 versus the Swiss franc, retreating from earlier highs of 161.58 and 167.37, respectively. If this downward trend continues, support levels are expected at 166.00 against the euro and 169.00 against the Swiss franc.
The yen also fell to 6-day lows against the British pound and U.S. dollar, reaching 192.97 and 148.65, respectively, from early highs of 191.63 and 148.04. Next support levels are seen around 194.00 for the pound and 151.00 for the greenback.
Meanwhile, the yen weakened against the Australian and New Zealand dollars, hitting 5-day lows of 93.57 and 84.95, respectively, down from earlier highs of 93.00 and 84.34. Support is likely to be tested near 95.00 against the Aussie and 86.00 against the Kiwi.
The yen also hit a 2-day low of 102.93 against the Canadian dollar, after peaking at 102.39 earlier. The next potential downside target for the yen is seen around 104.00.
Looking Ahead
Looking ahead to the New York session, key economic data will be released, including U.S. MBA mortgage approvals, February’s CPI data, and the U.S. EIA crude oil inventory report.
At 9:45 am ET, the Bank of Canada (BoC) will announce its interest rate decision. The market is anticipating a 25 basis point rate cut to 2.75%. BoC Governor Tiff Macklem will then address the media at a press conference scheduled for 10:30 am ET.
