The yen has performed the worst compared to other majors this year. USD/JPY, EUR/JPY, and GBP/JPY all occupy their respective high ranges.
Yen's weakness continues amid close monitoring by Japanese authorities. USD/JPY printed a new high this year at 151.85 on Monday (13/November). The level is also the highest since October 2022.
One factor driving the recent USD/JPY rally is the widening gap between US and Japanese bond yields. Expectations for US interest rates to remain high until next year, while Japanese interest rates are likely to remain negative for the same period.
The yen has slumped around 14% against the US dollar since the start of this year. Over the past week alone, USD/JPY jumped nearly 1.5%.
The yen is also weakening against many other major currencies. EUR/JPY is currently perched in its highest range since August 2008 near the 162.00 level. GBP/JPY has bounced up and down above the 180.00 threshold over the past few months, cementing a position at the highest range since November 2015.
Japanese Finance Minister Shunichi Suzuki said that the government will continue to monitor the market and respond accordingly. However, mere rhetoric no longer has an impact on the yen.
"We're in this pause where the dollar has peaked and the U.S. economy is slowing but people are going to wait for confirmation," said Societe Generale strategist Kit Juckes. "Given the move in U.S. Treasuries of course the yen is not rallying yet."
"At the moment, it still depends on the speed of movement (of the yen in the forex market), so if we move at the current pace, then it can still be controlled by Japan," said Geoff Yu, Senior Macro Strategist at BNY Mellon, regarding the risk of Japanese currency intervention, "Overall, the dollar environment is driving many things."
Market participants are now awaiting the release of US inflation data tomorrow. Fed officials last week signaled that inflation is still too high, so interest rates should also remain high for longer. If the US inflation data turns out to have declined more significantly than market expectations, the USD is at risk of correcting.