JPY is trading weak and underperforming – Scotiabank

The Japanese Yen (JPY) is weak, down 0.4% against the US Dollar (USD) and underperforming all of the G10 currencies as we enter Wednesday’s NA session.

JPY is weak on trade risks & less hawkish BoJ tone

"Trade policy uncertainty and relative central bank policy are both weighing on the yen as market participants consider the lack of tangible progress on US/Japan trade talks ahead of the July 9 deadline. President Trump has threatened levels higher than the 24% tariff currently planned, mentioning both 30% and 35% as he discussed the tone of negotiations and the state of the trade relationship."

"On monetary policy, messaging from BoJ Gov. Ueda has added to the theme of waning hawkishness as comments out of the ECB’s Sintra forum hinted to patience on rate hikes. Short-term rates markets are pricing no change for the next BoJ meeting on July 31 and 15bpts of tightening by year end."

"Markets had been pricing about 20bpts of tightening in early June. In terms of technicals, USD/JPY is range bound, chopping in a wide range around its 50 day MA (144.44) with recent closing support found in the mid-142s and resistance around 146."