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THE INSIDE JAPAN COLUMN: Yen Advances on Fed, Concern Over U.S. Politics: Inside Japan

(Bloomberg) — Yen gains for a second day as U.S. Treasury yields and dollar fell after FOMC minutes showed concerns about achieving inflation target and President Donald Trump disbanded his advisory groups.

  • USD/JPY falls 0.1% to 110.04 after losing 0.4% Wednesday
  • “U.S. political uncertainty and geopolitical risks in North Korea put USD/JPY under pressure,” says Yoshitsugu Fujita, vice president for global markets at Sumitomo Mitsui Trust Bank in New York
    • Dollar could test 108-109 yen levels
    • Still-high speculative yen shorts are likely to weigh on USD/JPY
  • “Uncertainty over the timing of the Fed’s rate hike increased after FOMC minutes,” Naoto Ono, currency analyst at Ueda Harlow Corp in Tokyo, writes in note
  • Japanese investors sold a net 145.5b yen of overseas bonds in week ended Aug. 11, first selling since June 30
  • Trade surplus shrank 4.8% to 418.8b yen in July; still higher than the 327.1b yen estimated by economists


  • Futures of 10-year govt notes closed after-hours trading at a session high of 150.71, a level unseen since June 8
  • Treasury 10- year note yield fell 5bps to 2.22% Wednesday
  • Finance ministry to auction 2.2t yen of 5-year notes; results at 12:45pm Tokyo time
  • A drop in USD/JPY basis swaps is fanning expectations that 5-year note sale will draw strong demand from overseas investors, Katsutoshi Inadome, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities, writes in note

–With assistance from Mika Otsuka. To contact the reporter on this story: Chikafumi Hodo in Tokyo at To contact the editors responsible for this story: Tan Hwee Ann at Masaki Kondo

Donald Trump (United States of America)
Katsutoshi Inadome (Mitsubishi UFJ Financial Group Inc)
Naoto Ono (Ueda Harlow Ltd)
Yoshitsugu Fujita (Sumitomo Mitsui Trust Holdings Inc)

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