**European Markets Update: Yen Declines Further as Equities Rally**
*Original coverage by Justin Low, ForexLive, via TradingView News. Additional context from Bloomberg, Reuters, and CNBC.*
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### Executive Summary
In European trading on June 25, 2024, global investors witnessed a continued downward trend in the Japanese yen, while equity markets throughout Europe pressed higher. The session’s highlights surround persistent yen weakness, the advancing performance of major European indexes, and continued market speculation on central bank policy direction. This article breaks down market movements, analyzes contributing factors, and looks ahead at potential implications, integrating insights from multiple industry sources.
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## 1. Currency Markets: Focus on the Japanese Yen
The most significant development in currency markets was the ongoing decline of the Japanese yen against major rivals, setting the pace for cross-asset sentiment.
### Key Highlights
– **USD/JPY Movement:** The US dollar surged above 160 against the yen, the first such event since late April 2024. This level is especially notable because in the spring, similar moves prompted Japanese government intervention to support the currency.
– **EUR/JPY and GBP/JPY:** Both euro and sterling also strengthened against the yen, trading near multi-year highs amid broad-based yen weakness.
– **Intervention Watch:** The yen’s decline past the 160 mark has market participants increasingly vigilant for another round of intervention from Japanese authorities.
### Analyses of Yen Weakness
– **Interest Rate Differentials:** The persistent weakness in the yen reflects a stark interest rate gap between Japan and other major economies. The Bank of Japan continues its ultra-loose monetary policy, maintaining negative short-term interest rates, while other central banks have moved to hike rates or signal future tightening.
– **Governor Ueda’s Comments:** Bank of Japan Governor Kazuo Ueda reiterated a cautious approach towards policy normalization, dampening expectations for near-term rate hikes, which has further depressed the currency.
– **External Statements:** Japan’s Finance Minister, Shunichi Suzuki, issued fresh warnings regarding ‘excessive’ FX moves, reiterating that appropriate measures would be taken if needed. However, this verbal guidance did little to reverse the market’s momentum.
### Implications
– **Higher Import Costs:** A weaker yen raises import prices for Japanese businesses and consumers, intensifying domestic inflationary pressures.
– **Boost for Exporters:** Conversely, yen devaluation benefits major Japanese exporters, whose overseas earnings become more valuable in local currency terms.
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## 2. European Equity Markets Extend Gains
While the yen’s trajectory seized attention in FX circles, European equities recorded further advances, building on recent rally momentum.
### Market Performances
– **Stoxx 600 Index:** The broad European benchmark edged higher by 0.4 percent into midday trading, reflecting a positive risk tone.
– **Key National Indexes:**
– Germany’s DAX and France’s CAC 40 each posted modest gains
– UK’s FT
Read more on AUD/USD trading.