FX.co ★ Japanese Yen Tracks JGB Yields Lower

The Japanese yen experienced a decline, nearing 144 against the dollar on Tuesday, as it retracted sharply from recent four-week highs. This shift was influenced by a fall in domestic bond yields, following news that the Japanese government intends to scale back the issuance of super-long bonds. This action is being taken to address rising yield levels. The decision also influenced a broader decrease in US Treasury yields, allowing the dollar to recover some strength. Reports suggest Japan's Ministry of Finance is reassessing its bond issuance strategy for the current fiscal year, which may include reductions in the supply of 20- and 40-year bonds. This reassessment comes in the wake of a poorly received 20-year bond auction last week, which drew the weakest demand seen in over ten years. Investors are now closely monitoring the upcoming 40-year bond auction. Moreover, Bank of Japan Governor Ueda reiterated the central bank’s commitment to "adjust the degree of monetary easing as necessary" to achieve inflation targets. He also highlighted potential upward pressures on core inflation due to rising food prices, heightening expectations for further policy tightening.