Rising 10-year US treasury yields resulted in the US dollar recording a high of two weeks, which brought the Japanese yen to the lowest it has been against the greenback in over two decades. The yen fell to as low as 133 per dollar, which had previously been termed intervention territory. This happened a day after Haruhiko Kuroda, the Governor of the Japanese central bank, said that they were committed to offering monetary stimulus to the economy in order to provide maximum support. Interest rate differentials between US bonds and Japanese debt always have an impact on the Japanese yen.
There was a 3.064% increase in the benchmark treasury yields in trading in Tokyo, which was a first in the last four weeks, but they fell to 3.0251%. Currency analysts said that many central banks globally have taken a hawkish stance, but the Bank of Japan was not following the same trend because of which the Japanese currency was down. Moreover, they do not expect that the central bank will change its stance any time soon in order to support the currency. Analysts said that intervention could only be possible if it is consistent with the monetary policy as well.
There was a 0.39% increase in the dollar index, which measures the value of the greenback against a basket of major currencies, which includes the Japanese yen. On Monday, the dollar had reached its strongest level since May 23rd, which was an increase of 0.26%, before it trimmed its gains a bit. There was a 0.14% fall in the euro to $1.0680 before a scheduled meeting of the European Central Bank (ECB) on Thursday. It is expected that the ECB will announce the end of its bond repurchasing program and begin the process of hiking interest rates in July for the first time in 11 years.
Sterling saw its value fall to $1.2433, which is the lowest it has been in three weeks. However, it managed to trim some of its losses, as investors were unnerved by the political headwinds for the premier, Boris Johnson. The no-confidence vote against the Prime Minister saw him come through with a 211 to 148 result. This was a 59% share that was lower than the 63% that his predecessor had achieved. Theresa May had found herself replaced within seven months of the vote, so it is expected that the same fate awaits Boris Johnson.
There was a 0.76% increase in the Australian dollar, after the Australian central bank increased its interest rates more than expected. But, it did not take long for the currency to shed the gains and was trading lower by 0.1%. According to analysts, the economic outlook of China played a role in this fall as well as the link between rate differentials in the short-term and the Aussie. As for the New Zealand dollar, the currency saw a decline of 0.63%, which brought it to a value of $0.6452. As for the yuan, the Chinese currency climbed against the dollar, to reach its highest level in a month.