Created
: 2025.11.11












2025.11.11 08:15
The USD/JPY pair attracts some buyers to near 154.10 during the early Asian session on Tuesday. The US Dollar (USD) strengthens against the Japanese Yen (JPY) as hopes grow for a potential deal to end the 41-day US federal government shutdown in the coming days. The US ADP Employment Change Weekly is due later on Tuesday.
On Monday, US President Donald Trump voiced support for a bipartisan agreement to end the US shutdown, a significant step that makes it likely the government will reopen within days. Meanwhile, Senate Majority Leader John Thune said that he expects Trump to sign it into law once Congress passes the legislation.
The positive developments came after the Senate took a major step toward reopening the federal government Sunday evening as it voted 60-40 on a procedural measure to advance a temporary funding bill. The measure would fund certain departments through January 30.
The uncertainty over the timing of the next interest rate hike by the Bank of Japan (BoJ) might undermine the JPY. Japan's new Prime Minister Sanae Takaichi is reportedly looking to finalize an economic stimulus package of around $65 billion to address inflation and growth by late November and pass a supplementary budget to fund it.
Nonetheless, Minutes from the BoJ's September meeting revealed that an increasing number of policymakers at the central bank believed that conditions were falling into place for interest rates to rise, with two members calling for an immediate hike.
The potential downside for the JPY might be limited by verbal intervention from Japanese authorities. Japanese Finance Minister Satsuki Katayama last week reiterated a strong sense of urgency as the markets grow more alert to the risk of government intervention down the line.
The Japanese Yen (JPY) is one of the world's most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan's policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan's mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ's stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen's value against other currencies seen as more risky to invest in.
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Created
: 2025.11.11
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Last updated
: 2025.11.11
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