Yen Falls Amid Risk-On Mood

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Tuesday, as Asian stock markets traded higher, boosted by markets in South Korea, Japan and Taiwan on a continued rally in semiconductor stocks which mirrored their peers on tech-heavy Nasdaq amid improving sentiment toward the AI sector. Easing geopolitical tensions in the Middle East also lifted investor sentiment.

After meeting Qatar's Prime Minister at the White House, U.S. President Donald Trump said there is positive momentum toward ending the Iran conflict and downplayed the prospect of further U.S. strikes on Iran but warned U.S. forces remained "locked and loaded."

Trump described the war as militarily "effectively over" but emphasized the continuation of the U.S. naval blockade and Operation Iron Gate.

The Bank of Japan's (BoJ) hawkish stance could limit the pair's gains. Traders are still on the lookout for Japanese government currency intervention.

The October policy meeting summary, which was made public today, states that the BoJ board members believe a short-term increase in interest rates is essential, indicating that a December move is likely. One of the nine board members stated, "The Bank should decide on the next policy interest rate hike when it is possible without becoming overly cautious."

In the near future, currency intervention by Japanese government may strengthen the Japanese yen (JPY) relative to the US dollar (USD). Japan intervened in the currency market on three days between July 30 and August 3, according to quarterly data issued by the Ministry of Finance (MOF) on Monday.

With a total of 7.98 trillion JPY ($50.36 billion), the greatest intervention occurred on July 30, surpassing the previous record of 6.28 trillion JPY established on April 30.

Later today, traders will be watching the US inflation figures. In October, economists anticipate a 0.3 percent month-on-month increase in the headline CPI and a 0.2 percent month-on-month increase in the core CPI.

In economic news, Japan's household spending dropped 6.8 percent on year in September 2026, deepening from August's decline and market expectations of a 3.1 percent drop. It marked the tenth consecutive month of contraction and the steepest fall since September 2020. On a seasonally adjusted monthly basis, spending fell 2.8 percent, reversing August's 0.1 percent increase and missing expectations of a 0.3 percent rise, marking its first decline in three months.

Meanwhile, Japan's bank lending grew by 5.2 percent on year in October 2026, unchanged from September's downwardly revised figure of 5.2 percent but falling short of market expectations for a 5.4 percent increase.

Japan's current account surplus decreased sharply to JPY 2,372.3 billion in September 2026 from JPY 4,375.8 billion in the same month a year earlier, falling short of market expectations of a surplus of JPY 3,354.4 billion. In the first half of fiscal 2026, Japan's trade surplus was little changed at JPY 17.15 trillion, compared with JPY 17.22 trillion a year earlier.

In the Asian trading today, the yen fell to 5-day lows of 177.51 against the euro and 212.58 against the pound, from yesterday's closing quotes of 177.23 and 212.26, respectively. If the yen extends its downtrend, it is likely to find support around 178.00 against the euro and 214.00 against the pound.

Against the U.S. dollar and the Swiss franc, the yen edged down to 158.12 and 193.23 from Monday's closing quotes of 157.391 and 192.66, respectively. The yen is likely to find support around 159.00 against the greenback and 194.00 against the franc.

Against the Australia and the New Zealand dollars, the yen slid to 5-day lows of 109.48 and 89.16 from yesterday's closing quotes of 109.38 and 88.94, respectively. On the downside, 111.00 against the aussie and 90.00 against the kiwi are seen as the next support levels for the yen.

The yen slipped to 111.99 against the Canadian dollar, from Monday's closing value of 111.86. The next possible downside target for the yen is seen around the 113.00 region.

Looking ahead, U.S. ADP weekly employment data, U.S. CPI data for October and U.S. WASDE report are slated for release in the New York session.