Japanese Yen strengthens on US bond buyback, traders brace for US PCE inflation report
The USD/JPY pair loses ground to near 158.90 during the Asian trading hours on Wednesday. The US Treasury’s bond buyback programs weigh on the US Dollar (USD) against the Japanese Yen (JPY).
The Japanese Yen strengthened against the US Dollar due to the US Treasury's increased bond buyback operations, which raised concerns over the national debt exceeding $40 trillion. The Bank of Japan's Governor Kazuo Ueda would not attend the US Federal Reserve's Jackson Hole gathering, with a senior board member attending in his absence.
Economists expected a September rate hike by the BoJ, but only a minority saw another hike in October or December. Technical analysis showed a bearish bias for USD/JPY near-term, with the pair trading below the 100-day Simple Moving Average. Support was seen at the 20-day Bollinger middle band around 158.75, with resistance at the 100-day SMA at 160.00.
The BoJ's gradual abandonment of ultra-loose monetary policy and interest rate cuts in other major central banks were narrowing the yield differential between the US and Japan, supporting the Yen. In uncertain times, the Japanese Yen often serves as a safe-haven investment.
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