The yen remains under pressure as the dollar strengthens against its major peers, with investors jittery about the prospect of aggressive interest rate hikes by the US Federal Reserve.
Japanese Finance Minister Shunichi Suzuki has warned that the government is watching the currency market closely and stands ready to intervene, but traders believe that the chances of this happening are slim.
One reason for this is that the Bank of Japan is still committed to its ultra-loose monetary policy, which makes it difficult for the government to intervene without risking conflict with the central bank.
Another reason is that the yen’s weakness is seen as beneficial to some Japanese exporters, as it makes their goods more competitive overseas.
As a result, most traders believe that the yen will continue to weaken against the dollar in the near term, unless there is a major shift in market sentiment.
Other key factors to watch on Tuesday
- European Central Bank (ECB) board member Philip Lane to participate in panel discussion: Lane is likely to be asked about the ECB’s monetary policy plans, and his comments could provide some clues about the timing of the next rate hike.
- US JOLTS data: This report measures the number of job openings in the US, and a strong reading could add to concerns about inflation.
- Switzerland CPI for September: This report is expected to show that inflation in Switzerland remained high in September, which could support the Swiss franc.
Overall, markets are likely to remain under pressure on Tuesday, with the dollar likely to continue to strengthen against most other currencies.