This week, Japanese yen strengthened against the US dollar. This increase in value is attributed to bets made by currency and bond traders, who believe that the Bank of Japan may soon move away from its ultra-loose monetary policy. The 3.5 per cent rise in July indicates that the yen is on track for its best month since the Japanese finance authorities intervened last year to support the currency. The yield on the 10-year Japanese government bond also rose by 0.02 points on the same day to reach 0.47 per cent, which is the highest level since late April.  Yen’s rise occurred just before the release of US inflation data for June. This data may provide clues about the future direction of the US Federal Reserve’s interest rate policies.

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JPY Spot vs JPY 1M TONA OIS