FX.co ★ Japanese Yen Hits 5-Week Low

On Monday, the Japanese yen fell below 146 per dollar, marking its weakest point in over five weeks. This decline was attributed to the US dollar's strength as a safe-haven currency in the wake of escalating tensions in the Middle East. Tensions surged following the US's airstrikes on three Iranian nuclear sites over the weekend, aligning with Israel in their ongoing conflict with Tehran, and sparking fears of potential retaliation. Domestically, economic indicators revealed that Japan's manufacturing sector resumed growth in June for the first time since May 2024. Meanwhile, the services sector continued to expand for the third consecutive month, reflecting overall economic resilience. In the previous week, the Bank of Japan maintained its key interest rate at 0.5%, observing that businesses are increasingly transferring wage gains into prices, thereby sustaining elevated core inflation. Governor Kazuo Ueda emphasized a commitment to a data-driven policy strategy and indicated the possibility of future rate hikes should inflationary pressures continue.