WIKIFX REPORT: The Yen dropped to new lowThe Yen dropped to new lows. Overview for 07.06.2022

The yen is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar and the euro. The Japanese Yen dropped to its 20-year lows against the USD on Tuesday. The current quote for the instrument is 132.94, the lowest since April 2002.

The currency fell as much as 0.8% to 132.96 per dollar -- the lowest since April 2002 -- with benchmark Treasury yields trading above the closely-watched 3% level. It slid to a seven-year low against the euro and the Australian dollar, heaping pressure on a Japanese government facing a backlash over rising prices.

Japanese companies and households have become increasingly vocal about the negative effects of the weaker yen, as input and energy costs soar. A further slide will put pressure on the consensus between a central bank determined to stoke inflation and a government desperate to avoid a cost-of-living crisis ahead of a national election in coming months.

The key trigger for this decline was US bond yield growth, which supported the “greenback” – it added 3.04%, the biggest gain in three weeks. If this rally continues, the Yen may continue plunging.

Based on The statistics published by Japan this morning showed that Household Spending lost 1.7% y/y in April, which is better than the March data but worse than the expected decline by 0.5% y/y.

This report is a leading indicator, and that‘s why it’s very important for assessing future prospects. Slow inflation remains a strong headache for the Ban of Japan and the Ministry of Finance. Average Cash Earnings gained 1.7% y/y in April, ahead of a 1.5% expectation but far behind the March reading.