Asian currency markets moved higher on Wednesday as the Japanese yen held near a seven‑month peak and the U.S. dollar slipped modestly. The yen, which surged 4% in September, reached a high of 152.89 per dollar on Tuesday and was quoted at 153.63 against the greenback on Wednesday, down 0.2%.
The U.S. dollar index rose 0.1% to 98.83, while the euro gained 0.1% to $1.1629. In the United States, Treasury yields climbed, with the benchmark 10‑year yield up 3.5 basis points to 4.839% and the two‑year yield rising 2.7 basis points to 4.425%.
The Federal Reserve, European Central Bank and Bank of Japan remain in focus. The BoJ is expected to raise its policy rate by 25 basis points on September 18, continuing its normalization path. Japan’s foreign securities holdings fell to a record $87.8 billion in August, and the government’s currency‑intervention operations totalled about 15 trillion yen (roughly $97.7 billion).
In the United States, the Treasury announced a buyback program of up to $6 billion in 10‑year to 20‑year maturities, an increase from the previous $2 billion target and above the $4 billion level set the month before. Analysts noted that smaller‑than‑expected buybacks could pressure long‑term yields higher.
The European Central Bank is also anticipated to lift rates by 25 basis points, with market participants pricing a terminal policy rate of about 3% driven by recent energy price spikes. Commentators highlighted the uncertainty surrounding the ECB’s response to a potential supply shock.
"The yen's rally reflects a genuine fundamental and technical shift," said Adam Turnquist of LPL Financial. "Watch the 152 level closely as a decisive break below could accelerate the yen rally and affect global assets, including U.S. Treasuries."
Robin Brooks of the Brookings Institution warned that artificial caps on long‑term yields, such as Treasury buybacks, could backfire if markets deem the interventions insufficient. Deutsche Bank's Jim Reid noted the market’s heavy reliance on energy‑driven expectations for the ECB’s policy trajectory.
