SINGAPORE — The Japanese yen wobbled in volatile trading on Wednesday as ructions in the bond market kept the spotlight on the fiscal health of major economies while the US dollar steadied after a strong end to the previous session due to upbeat economic data.
The yen was last little changed at 144.345 per dollar in early trading after dropping 1 percent on Tuesday in the wake of reports that Japan will consider trimming issuance of super-long bonds after a sharp rise in yields in recent weeks.
The focus will remain on the Japanese bond market, with an auction of Japan’s longest-tenor bonds due on Wednesday a litmus test for appetite for that type of debt as investors weigh worsening finances of major government issuers.
The longest-dated Japanese government bond yields soared to all-time highs last week after a poor 20-year debt auction. On Wednesday, the yield on Japanese government bonds was slightly higher after a sharp dive in the previous session.
Charu Chanana, chief investment strategist at Saxo, said the auction in Japan was unlikely to draw strong demand amid the recent surge in long-end yields.
“Even if the results are solid, a sustained decline in yields looks unlikely given BOJ policy uncertainty and fiscal concerns ahead of the July elections,” she said.
“For the yen, risks remain two-way – policy uncertainty keeps upside pressure intact amid haven flows, but a softening in US tariff rhetoric could limit gains,” Chanana added.
The yen has gained nearly 9 percent so far in 2025 due to dollar weakness and safe-haven flows as investors flee US assets in the wake of the erratic trade policies under President Donald Trump that have roiled markets.
