The yen improved for a third day in contradiction of the USD among concern the Bank of Japan is hostile to control the increase in Japanese government bond yields.
After BOJ Governor Haruhiko Kuroda said yesterday Japan might deal with the increasing interest rates, the yen increased against most of its 16 main peers. On May 23, yields on JGBs increased to the highest in more than a year, restraining the attraction of selling the yen in search of higher yields in another place. Futures traders enlarged bets to the greatest since July 2007 that the yen will decline versus the USD. South Africa’s rand fell before a report will be issued that is predicted to show growth reduction.
Beat Siegenthaler a currency strategist at UBS AG in Zurich stated “The short-yen trade has been driven mainly by speculative money on the expectation that ultimately Japanese investors would also join the trade,” he added “If higher JGB yields mean this is not going to happen, or to a lesser extent, then this will be a problem for short-yen positions.”
The yen increased by 0.27% to reach 101.0200 USD/JPY at 10:43 a.m. EDT after increasing 1.9% last week, the sharpest rise since the five days and ended June 1. It enlarged 0.3% to reach 130.65 EUR/JPY after a 1.2% advance in the five days ended May 24. Europe’s common currency made a slight improvement at $1.2937.
Markets in the U.S. and U.K. are closed for public holidays.