US markets to remain closed, yen stable in early trade

4 Jul 2023 , 09:32 AM

The Australian dollar strengthened ahead of a central bank policy announcement, while the yen edged up on Tuesday but remained susceptible to further losses. It was trading close to the crucial 145 per dollar level as markets watched for signs of intervention.

Early Asian trading saw the yen up 0.17% at 144.42 per dollar, but it was still near to the eight-month low of 145.07 set last week, which caused Finance Minister Shunichi Suzuki to caution against excessive currency dumping. 

Masato Kanda, the senior financial diplomat for Japan, stated earlier on Tuesday that the country’s officials communicated often on a daily basis about currencies and broader financial markets with U.S. Treasury Secretary Janet Yellen and other foreign authorities.

The Bank of Japan’s promise to maintain its ultra-loose monetary policy for as long as necessary caused the yen to fall as low as 145 to the dollar in September, prompting Japan to purchase yen, its first venture into the market to support its currency since 1998. In October, as the yen fell to a 32-year low of 151.94, it once more entered the picture. 

The dollar weakened 0.039% to 102.910 against a basket of currencies as overnight data revealed that U.S. manufacturing fell even more in June, hitting lows last seen when the country was still recovering from the first wave of the COVID-19 pandemic.

American markets are closed on July 4 in observance of Independence Day. Investor attention this week will be on the nonfarm payrolls statistics and the jobs report for fresh hints about the larger US employment market. 

On Wednesday, the U.S. Federal Reserve is also expected to release the minutes from its June meeting. According to the CME FedWatch tool, markets are pricing in a close to 87% chance of a 25 basis point raise at the next Federal Reserve meeting at the end of the month. 

In relation to the US dollar, the Australian dollar was trading at $0.668, up 0.16%, and the New Zealand dollar was trading at $0.616 as well. While sterling last traded at $1.2699, up 0.06% on the day, the euro was up 0.02% to $1.0913.

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