Japanese Yen Rises As Japan Urges Pension Funds To Invest In Domestic Assets

The USD/JPY pair tumbles to around 161.50 during the early European trading hours on Friday. The Japanese Yen (JPY) edges higher against the US Dollar (USD) after the reports that Japan plans to encourage pension funds to increase their holdings of domestic financial assets.

Japan’s Finance Minister Satsuki Katayama said that the government is pursuing measures that would include the Government Pension Investment Fund (GPIF) to make "substantially greater investments in Japanese financial assets,” per Reuters. Analysts said this move could offer greater support to ‌the battered currency than intervention.

Traders reduce their bets of a rate hike from the US Federal Reserve (Fed) this year, weighing on the Greenback against the JPY. New York Fed President John Williams said on Thursday that despite the resumption of hostilities in the Middle East, he was not looking for a sustained rise in ‌energy prices over the remainder of the year.

Expectations for a rate hike of at least 25 basis points (bps) at the July meeting dropped to 24.6% from 31% in the previous session, but up from 18.2% a week ago, according to the CME FedWatch tool. For the September policy meeting, markets are pricing in a 62.3% chance of a hike, down from the 66.6% on Wednesday but an increase from the 54.1% a week earlier.