Yen Advances Against Majors

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Monday, amid fading hopes for an immediate the Bank of Japan (BoJ) rate hike.

Strengthening anticipations for a Federal Reserve interest rate reduction in September could contribute to capping the USD/JPY pair.

The recent weaker than expected U.S. monthly jobs data increased optimism about a potential interest rate cut by the US Fed as early as September.

Concerns about the economic impact of U.S. President Donald Trump's unilateral "reciprocal tariffs" and aggressive trade stance on the global economy, also led to the upturn of safe-haven JPY.

Trump reordered the global economy by signing an executive order to impose new tariffs on 69 countries trading with the US, with levies ranging anywhere from 15 to 41 percent. The tariffs are set to take effect from August 7 to give room for officials to prepare for the tax collections. He said a 40 percent levy will be imposed on goods that have been transshipped to evade applicable duties.

Traders await the BoJ monetary policy meeting minutes will be released later on Tuesday.

Meanwhile, traders remain cautious about the reduced Bank of Japan (BoJ) rate hike expectations and political uncertainty in Japan.

In economic news, the monetary base in Japan was down 3.9 percent on year in July, the Bank of Japan said on Monday - coming in at 643.896 trillion yen. That follows the downwardly revised 3.5 percent annual decline in June (originally -3.3 percent). The adjusted monetary base was down 2.8 percent on year at 643.997 trillion yen.

Banknotes in circulation were down 2.4 percent on year, while coins in circulation fell 1.4 percent. Current account balances shrank 4.3 percent on year, including a 2.2 percent decline in reserve balances.

In the Asian trading today, the yen rose to nearly a 2-week high of 147.27 against the U.S. dollar, from last Friday's closing value of 147.38. The yen may test resistance around the 145.00 region.

Against the euro, the pound and the Swiss franc, the yen advanced to 170.52, 195.64 and 182.98 from last week's closing quotes of 170.74, 195.71 and 183.31, respectively. If the yen extends its uptrend, it is likely to find resistance around 166.00 against the euro, 193.00 against the pound and 181.00 against the franc.

Against the Australia, the New Zealand and the Canadian dollars, the yen advanced to 95.29, 87.10 and 106.90 from last week's closing quotes of 95.46, 87.20 and 106.89, respectively. The yen may test resistance around 94.00 against the aussie, 86.00 against the kiwi and 105.00 against the loonie.

Looking ahead, U.S. factory orders for June is due to be released in the New York session.