Key facts
- The Japanese yen is heading for its largest weekly loss in three months.
- The yen is trading near 159.43 per dollar, with 160 seen as a potential intervention trigger.
- Asian stocks are set for their strongest weekly gain in two months.
- U.S. inflation data has reduced expectations of a Federal Reserve rate hike next month.
- Gold prices declined as expectations for a near-term U.S. rate hike dimmed.
The Japanese yen is on track for its largest weekly loss in three months, trading near 159.40 per dollar, a level that could prompt intervention by Japanese authorities. This depreciation comes despite broader market sentiment favoring risk assets, driven by cooling U.S. inflation data that has reduced expectations for an imminent Federal Reserve rate hike. Asian stocks have seen their strongest weekly performance in two months, buoyed by this shift in monetary policy outlook. However, ongoing geopolitical uncertainty, particularly concerning the Middle East and its impact on oil prices, continues to temper risk appetite. Analysts suggest that sustained yen weakness stems from the Bank of Japan's cautious monetary policy and low interest rates, with intervention alone unlikely to alter the trend without a more hawkish policy shift from the BOJ. Gold prices have eased as the prospect of higher U.S. interest rates diminishes.