London Daily

Focus on the big picture.
Friday, Jul 03, 2026

Yen tanks as FX market adjusts to central bank rate decisions

Yen tanks as FX market adjusts to central bank rate decisions

The Japanese yen tumbled against the dollar on Friday after the Bank of Japan bucked a wave of tightening and stuck with its ultra-accommodative stance, adding to soaring volatility in currency markets hit by a series of rate hikes this week.

Currency markets have been roiled by one of the biggest runs of monetary policy tightening in decades, including the Federal Reserve's mid-week three-quarters-of-a-percentage-point rate increase, its biggest since 1995, and the Swiss National Bank's surprise decision to hike rates by 50 basis points.

Japan's central bank swam against the current on Friday, keeping its policy settings unchanged and vowing to defend its bond yield cap of 0.25% with unlimited buying.

"Everybody expected the BOJ to do something. They didn't," said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

The yen, which on Wednesday hit a 24-year low of 135.6 per dollar, plunged in reaction to the BOJ decision. The Japanese currency was last down 2.09% against the greenback at 134.885 yen, and was 1.62% lower versus the euro .

The 135 level has been a technical resistance point for the yen and breaking through it could force many shorts against the dollar-yen currency pair to have to cover their bets, potentially pushing the pair up to 137 or 140, said Schlossberg.

"If we start to really creep higher from this point, I think it will definitely force some of these early shorts out of the trade," he said.

yen 24 year lows


The dollar rose from a one-week low against major peers, bouncing off a two-day slide after the Fed's mid-week rate increase of 75 basis points, a move that was anticipated by markets as the Fed attempts to tame stubbornly high inflation.

The dollar index, which measures the currency against a basket of six rivals, was up 0.732% at 104.64 , putting it on track for a weekly rise of around 0.4% ahead of a long weekend in the United States.

"Today we're seeing a rebalancing of the market," said Simon Harvey, head of FX analysis at Monex Europe. "Markets are still adjusting to the central bank meetings from throughout the week."

The euro was last down 0.53% at $1.0496 versus the dollar.

The Swiss National Bank's surprise decision to raise rates by half a percentage point continued to reverberate through markets, with the franc touching 1.0098 against the euro, its strongest since April 13, as investors bet the SNB would not try to stop the strengthening currency as it has in the past.

Giving up earlier gains against the Swiss currency, the dollar lost 0.31% to 0.9696 francs , after tumbling the most in seven years versus the Swissy in the previous session.

"The surprise rate hike in Switzerland, as well as the European Central Bank's announcement that it is working on a tool to prevent the fragmentation of the European bond markets, will help to limit USD strength around current levels," strategists at UBS's Global Wealth Management’s Chief Investment Office said in a research note.

Sterling dropped 0.99% to $1.2229, giving back most of its gains from when the Bank of England decided to lift rates again, albeit by less than many in the market had expected, along with a hawkish signal about future policy action.

Currency markets are also having to contend with a massive drop in risk sentiment that has roiled equity markets.

The Australian dollar, which is very sensitive to the broad global investment mood, fell 1.53% to just under $0.6938 after stock markets in Asia tumbled, while Wall Street edged higher after a steep selloff on Thursday.

Newsletter

Related Articles

0:00
0:00
Close
Luxury bags take over the World Cup: style, status symbol, or just showing off?
National Productivity Institute Highlights Weak Business Investment Outside Southern England
UK High Court Orders Reassessment of Environmental Impact in Major Highway Project
UK Cyber Security Centre Warns of Rising Threat From State-Sponsored Digital Espionage
UK Education Secretary Launches National Reform of Apprenticeships and Vocational Training
Financial Conduct Authority Tightens Climate Risk Disclosure Requirements for Listed Firms
Rail Union Suspends Planned Strike Action to Enter Formal Negotiations With Operators
Northern Ireland Businesses Seek Clarity Over Post-Brexit Trade Rules
Welsh Government Launches Regional Growth Plan Targeting Transport and Digital Infrastructure
North Sea Wind Sector Attracts £5 Billion Investment Amid Expansion of Offshore Capacity
Scotland and UK Governments Establish New Framework for Coordinated Investment in Energy and Infrastructure
UK Government Launches Major Immigration and Border Policy Overhaul Review
Bank of England Signals Interest Rates to Remain Elevated Despite Easing Inflation Pressures
National Health Service Warns of Severe Winter Capacity Strain Across Hospital Trusts
Chancellor Orders Urgent Treasury Review Amid Concerns Over Structural Public Finance Gap
Prime Minister Unveils Sweeping Legislative Programme Focused on Housing, Health Service Reform and State Energy Plan
UK Parliamentary Committee Launches Inquiry Into Falling Primary School Rolls and Public Service Impact
UK House of Lords Debates Electoral Commission Powers and Political Finance Reform
UK Parliament Considers Expanding Carbon Rules to International Aviation and Shipping Emissions
UK Traffic Commissioner Revokes Hampshire Haulage Operator Licence Over Regulatory Failures
UK Parliament Examines Risks in Public Contracts Awarded to Technology Firm Palantir
UK Competition Watchdog Moves Toward More Flexible Merger Rules to Support Efficiency and Growth
UK Government Seeks Approval for £1.15 Trillion Public Spending Plan Amid Scrutiny Over Department Budgets
UK Parliament Debates Sweeping National Security and Steel Industry Nationalisation Bills
UK Government Issues Formal Apology for Historic Forced Adoption Practices and Announces £4 Million Support Scheme
UK DEFENCE AND TECHNOLOGY STRATEGY TILTS TOWARD SOVEREIGN CAPABILITY AND INDUSTRIAL INVESTMENT
UK ECONOMIC POLICY OUTLOOK SHAPED BY LEADERSHIP TRANSITION AND FISCAL SIGNALS
STERLING STRENGTHENS AMID SHIFTING MONETARY OUTLOOK AND GLOBAL LABOUR MARKET SIGNALS
UK HPV VACCINATION PROGRAM NEARLY ELIMINATES CERVICAL CANCER DEATH RISK IN YOUNG WOMEN
UK EXPANDS PRISON SAFETY REVIEW AS GOVERNMENT SEEKS WIDER SYSTEM REFORM
UK DRIVES DIGITAL ASSETS STRATEGY WITH NEW STABLECOIN REGULATORY MODEL
UK TO EXPAND AI INFRASTRUCTURE THROUGH NEW EUROPEAN TECHNOLOGY PARTNERSHIP
UK LAUNCHES £15 BILLION DEFENCE TECH SHIFT TOWARD ADVANCED MILITARY SYSTEMS
CIVIL SERVICE FACES SHIFT IN POWER STRUCTURE AS REGIONAL GOVERNANCE PLANS EXPAND
WHITEHALL CONSIDERS MAJOR DECENTRALISATION PLAN WITH SECOND GOVERNMENT HUB IN MANCHESTER
UK TARGETS SERVICES EXPORT GROWTH IN TRADE TALKS WITH CHINA AMID GEOPOLITICAL TENSIONS
POLICE WATCHDOG PROBES OFFICERS OVER HANDCUFFING OF DYING TEENAGER IN HAMPSHIRE CASE
UK REGULATORS UNVEIL DUAL OVERSIGHT FRAMEWORK FOR STABLECOINS AND DIGITAL ASSETS
KEIR STARMER ANNOUNCES £15 BILLION DEFENCE TECHNOLOGY BOOST IN FINAL MAJOR POLICY MOVE
ANDY BURNHAM SIGNALS STRICT FISCAL RULES AS LABOUR LEADERSHIP RACE SHAPES MARKET OUTLOOK
POUND STERLING HITS ONE-YEAR HIGH AS BANK OF ENGLAND SIGNALS NO IMMINENT RATE CUTS
UK Government Confirms Rejected Asylum Seekers to Remain Amid Enforcement Challenges
UK-China Economic Talks Focus on Services Trade and High-Value Sectors
Buckingham Palace Revamp Plans Unveiled to Modernise Royal and Public Facilities
Two Dead After Light Aircraft Crash in Essex Field, Investigation Underway
Princess Diana Marked at 65 With UK Tributes Reflecting on Her Public Legacy
England Teachers Face New Pay Cap Rules for Academy School Leaders Under Education Reform
Dublin Security Alert Escalates After Stabbing and Reports of Transport Disruption
UK Government Faces Scrutiny Over £10,000 Asylum Living Cost Contribution Requirement
England Prepares World Cup Knockout Match Against Democratic Republic of Congo
×