Forex News: Yen Advances As Japan Encourages Pension Funds To

Yen Advances As Japan Encourages Pension Funds To Invest In Domestic Assets

(RTTNews) - The yen strengthened against other major currencies in the Asian session on Friday, following news that Japan intends to encourage pension funds to enhance their holdings in local financial assets.

According to Reuters, Japan's Finance Minister Satsuki Katayama stated that the government is pursuing policies that would involve the Government Pension Investment Fund (GPIF) making "substantially greater investments in Japanese financial assets." According to analysts, this move could provide more support for the battered currency than intervention.

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

According to the CME FedWatch tool, expectations for a rate hike of at least 25 basis points (bps) at the July meeting increased from 18.2% a week earlier to 24.6% from 31% in the prior session. Markets are putting in a 62.3% possibility of a raise for the September policy meeting, which is higher than the 54.1% a week ago but lower than the 66.6% on Wednesday.

In economic news, Japan's producer prices rose 7.1 percent on year in June 2026, accelerating from an upwardly revised 6.6 percent increase in the previous month and exceeding market expectations of a 6.8 percent gain. It marked the fastest annual increase since March 2023.

On a monthly basis, producer prices grew 0.4 percent, easing from an upwardly revised 1.1 percent gain in May and marking the slowest monthly growth in four months.

Asian stock markets traded higher, boosted by the surge in semiconductor and AI stocks amid reports that the $28 billion SK Hynix IPO in the U.S. was heavily oversubscribed. Speculation that the escalation of hostilities between the U.S. and Iran will be limited is also aiding market sentiment.

Traders remain optimistic that a full-blown war can be avoided in the Middle East after US President Donald Trump claimed that Iran wants to "make a deal so badly," although that is in line with his typical rhetoric. He added that he doesn't know if they're worthy of making a deal.

While Trump's position indicated an uncertainty on how he plans to resolve the crisis, experts are of the view that diplomatic measures would be given full chance.

In the Asian trading today, the yen rose to 4-day highs of 184.73 against the euro and 161.29 against the U.S. dollar, from yesterday's closing quotes of 185.64 and 162.37, respectively. If the yen extends its uptrend, it is likely to find resistance around 183.00 against the euro and 159.00 against the greenback.

The yen climbed to a 3-day high of 113.99 against the Canadian dollar, from Thursday's closing value of 114.61. The yen is likely to find resistance around the 112.00 region.

Against the pound, the Swiss franc and the Australian dollar, the yen advanced to 2-day highs of 216.85, 200.65 and 112.24 from Thursday's closing quotes of 217.79, 201.30 and 112.73, respectively. The next possible upside target for the yen is seen around 214.00 against the pound, 199.00 against the franc and 111.00 against the aussie.

Looking ahead, Canada jobs data for June and building permits for May, and U.S. weekly Baker Hughes oil rig count data are slated for release in the New York session.

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