Week in review
The USD/JPY opened the week at 150.13. The pair rose gradually as the Nikkei 225 hit all-time highs at the start of the week, reaching a weekly high of 150.57 after Atlanta Fed President Raphael Bostic displayed a cautious stance on rate cuts. The Tokyo CPI for February announced on the morning of 5 March was broadly in line with the market's expectations and the USD/JPY lost direction below 150.50 through European trading hours, then fell below 150 in US trading hours as dollar selling gained steam after the ISM Non-Manufacturing Index missed expectations. The USD/JPY appeared to have bottomed temporarily at around 150, but the pair moved gradually lower as the yen strengthened following speculative reports regarding the BOJ's March monetary policy meeting published in European trading hours. Dollar selling also added to this momentum after Fed Chair Jay Powell's closely watched testimony to Congress showed none of the hawkishness that the market had feared. The USD/JPY fell below 149 on the morning of 7 March as the media continued to carry reports on the BOJ's monetary policy. Yen buying then gained momentum in the afternoon as BOJ Governor Kazuo Ueda's parliamentary hearing and BOJ policy board member Junko Nakagawa's press conference appeared positive toward a change in policy, and the USD/JPY fell to the 147 level at the start of the US session. It rebounded to around 148 on a sense of firmness, but Fed Chair Jay Powell's positive stance toward rate cuts at his testimony to the Senate held back upside. The USD/JPY fell to a low for the week of 147.54 on 8 March before writing this report and has been trading below 148 (Figure 1). This week, the dollar weakened against all other G10 currencies while the yen was the strongest performer (Figure 2).
FIGURE 1: USD/JPY
Note: Through 12:00pm JST on 8 March
Source: EBS, Refinitiv, MUFG
FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK
Note: Through 12:00pm JST on 8 March
Source: Bloomberg, MUFG
