Against other major currencies, the Japanese yen gained strength during Friday’s Asian session as investors anticipated the release of the crucial U.S. jobs report later in the day for further indications regarding the Fed’s rate trajectory while Middle East concerns lingered.
Overnight, Israel launched a series of missile strikes in Beirut‘s southern suburbs and another that severed the key border crossing between Syria and Lebanon.
Ayatollah Ali Khamenei, the Supreme Leader of Iran, declared today that although the United States and its allies were maintaining Israel’s security to make it a doorway for the export of energy from the region to the West, the resistance in the region will not back down against Israel.
According to US President Joe Biden, Israel may launch operations against Iran’s oil sector.
Following a meeting with the governor of the central bank, Japan’s newly appointed prime minister, Shigeru Ishiba, stated that the country is not ready for further rate hikes, which caused the yen to drop against other major currencies on Thursday.
Yen Against Other Currencies
The yen increased from yesterday’s closing prices of 162.04 and 192.80, respectively, to 2-day highs of 161.01 against the euro and 191.75 against the pound during Asian trade today. Resistance for the yen might be found at about 156.00 versus the euro and 185.00 versus the pound.
The yen crept higher to 171.59 against the Swiss franc, from Thursday’s closing value of 172.25. The yen is expected to encounter resistance at 166.00 in the positive direction.
The yen rose to two-day highs of 145.92, 99.91, 90.65, and 107.67 against the US, Australian, New Zealand, and Canadian dollars, up from yesterday’s closing prices of 146.92, 100.49, 91.26, and 108.37.
If the yen continues its upward trajectory, it is likely to encounter resistance at 139.00 versus the US dollar, 96.00 against the Australian dollar, 87.00 against the New Zealand dollar, and 103.00 against the Canadian dollar.
Looking forward, September jobs data in the United States, September Ivey PMI data in Canada, and September Baker Hughes oil rig count data in the United States are all scheduled to be announced.
Final Thoughts
The recent strengthening of the Japanese yen against major currencies is reflective of the complex interplay between geopolitical tensions and market expectations surrounding U.S. economic data. Investors are bracing for the U.S. jobs report, which could provide further clues regarding the Federal Reserve’s next moves on interest rates.
This anticipation, combined with ongoing concerns in the Middle East, particularly Israel’s missile strikes and Iran’s escalating rhetoric, has created a cautious market environment that benefits traditionally safer currencies like the yen. However, Japan’s new prime minister’s recent remarks hinting that Japan is not ready for further rate hikes add a layer of uncertainty, potentially limiting the yen’s longer-term strength.
Despite the yen’s short-term gains, particularly against the euro, pound, and U.S. dollar, there are clear technical resistance points that could cap its upward momentum. The geopolitical climate remains highly volatile, with the potential for escalated conflict impacting oil prices and further influencing currency movements.
Should the U.S. jobs report signal continued strength in the U.S. economy, it may prompt renewed dollar gains, offsetting some of the yen’s recent advancements. Thus, the yen’s current trajectory appears to be a product of both external geopolitical factors and market expectations, but its sustainability will largely depend on upcoming economic data and geopolitical developments.