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Japanese yen weakens further as 160 beckons

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June 21 (Reuters) -Another session of yen selling to close out the week took USD/JPY to a high of 159.63 on Friday, as traders pressed on with JPY-funded carry trades and bulls appeared to be in control for now, making more gains likely.

The latest push followed a goldilocks U.S. PMI report, which saw business activity rise to a 26-month high, while price pressures eased.

As has been noted previously, the dollar has been ignoring Treasury yields diverging lower, which would normally open the door to a bout of weakness in the U.S. currency.

With stocks continuing to print new all-time highs, the path of least resistance for USD/JPY remains on the upside. At the same time, dips in the pair will continue to be promptly bought into.

Outside of a combination of UST yields and equities drifting lower, the yen will continue to find it difficult to sustain a persistent bid. Japan’s top currency diplomat, Masato Kanda, reiterated that officials in Tokyo stand ready to guard against excessive moves.

Though, with the yen some distance away from hitting the trigger on what is considered excessive – 4% move in two-week and low to high 10-yen move – there is little threat of intervention for now. In any case, this will likely keep bulls firmly in control with eyes set for a test of 160.

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USDJPY 4-hour chart https://tmsnrt.rs/3XzO50j

(Justin McQueen is a Reuters market analyst. The views expressed are his own.)


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