Week in review

The USD/JPY opened the week at 160.11. Yen buying dominated from the start of the week, pushing the pair below 160. Treasury Secretary Scott Bessent then held a series of meetings with Finance Minister Satsuki Katayama and BOJ Governor Kazuo Ueda on the sidelines of the G20 meeting. Bessent's comment that he was confident the Japanese authorities would take steps that would lead to a stronger yen also weighed on the pair, which struggled to move higher above 159.50. The USD/JPY recovered above 160 on 1 September as the 10y JGB yield reached 3% and rose to a high of 160.39 early on 2 September. Yen buying then resumed after BOJ policy board member Hajime Takata referred to the size of future rate hikes, sending the pair sharply lower to around 158 during US trading that day. The decline continued during Tokyo trading on 3 September, with the pair falling intermittently to around 155.50. It briefly slipped further to below 155.50 at the time of writing on 4 September (Figure 1). The yen strengthened across the board this week. The dollar softened as expectations of further Fed rate hikes receded, while the New Zealand dollar was sold into its rebound following the RBNZ's rate hike (Figure 2).

FIGURE 1: USD/JPY

Note: As at 14:00 JST on 4 September
Source: EBS, Refinitiv, MUFG

FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK

Note: As at 13:00 JST on 4 September
Source: Bloomberg, MUFG