The Japanese Yen (JPY) attracts heavy selling during the Asian session on Thursday in reaction to the news that a US federal court blocked President Donald Trump's "Liberation Day" tariffs from going into effect.
The development boosts investors' confidence and triggers a fresh wave of the risk-on trade, which, in turn, weighs heavily on traditional safe-haven assets, including the JPY. Apart from this, the Federal Reserve's (Fed) wait-and-see approach remains supportive of a strong follow-through US Dollar (USD) move higher and assists the USD/JPY pair to prolong its weekly uptrend for the fourth consecutive day.
Moreover, demand at an auction of 40-year Japanese Government Bonds (JGB) on Wednesday fell to the lowest since July and pointed to worries about the debt load in Japan. This leads to a further steep decline in the longest JGB yields and turns out to be another factor driving flows away from the JPY.
Meanwhile, the growing acceptance that the Bank of Japan (BoJ) will continue raising interest rates marks a big divergence in comparison to bets that the Fed will lower borrowing costs further in 2025. This might hold back traders from placing aggressive bearish bets around the lower-yielding JPY and cap the USD/JPY pair.
Source: Fxstreet
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