The advantage of the United States government bond yields mainly has an impact on the dollar versus the Japanese yen. The USD has continued to strengthen against the Japanese yen.

It is especially over the past two months, until the USD/JPY broke through the 114.40 level in the Asian session trading two days ago. In fact, this triggers the reactions in the market. 

The yen's weakest position since October 2018 has attracted special attention from Japanese authorities. The stability of the currency is very important for the market participants. 

That is why; they will continue to monitor the market movements carefully. This statement was said by Yoshihiko Isozaki, a deputy chief cabinet secretary, In a news conference.

Sometimes, the Yen’s Weak Exchange Is More Liked

The statement was made by Isozaki while responding to a question about the fall in the Japanese yen exchange rate. He declined to specify which levels to monitor in this case. 

However, his remarks likely signaled a change in Japanese officials' stance on currency exchange rates. Japanese officials usually prefer a weaker yen exchange rate.

It is because that provides a better competitiveness for the products abroad Made by that country. The Efforts to weaken the exchange rate have even become an integral part of Abenomics.

That which has been the direction of japan's economy over the past few years. However, the yen's recent slump has coincided with an increase in energy prices happened lately. 

Weaker Currency Is not Good for the Commodity Price

The slump in the yen and rising energy prices have raised the fears of a higher burden on households and retailers. That is the most possible thing to happen. 

It is especially amid the impact of the COVID-19 pandemic that has not completely disappeared. The Japanese Prime Minister Fumio Kishida gave his thought. 

He vowed to improve the distribution of wealth in his campaign last October. For consumers, a weak yen exacerbates the impact of more expensive commodity costs. 

This is especially detrimental to low-income households. That opinion was said by Ryutaro Kono, bnp paribas chief economist and it seems that the opinion was quite reasonable. 

That May Affect the Inflation Rate

If oil prices and the USD/JPY exchange rate hold in the current range for the next year, the core consumer inflation rate will accelerate to close to 1 percent. That is quite good. 

Kono said the inflation rate was still below the 2 percent target targeted by the japan's central bank (BoJ). However, that number was still high enough to cripple the consumer households.

For Japanese households who almost never witness an increase in income, this could turn into a major political issue and have an impact on monetary policy going forward.

The next market will monitor the BoJ Governor Haruhiko Kuroda's views on the matter. Kuroda will communicate with the public in a post-BoJ policy meeting news conference next week.

Meanwhile, USD/CAD is Now in a Higher Level

Elsewhere, the USD/CAD pair edged up by 0.19% to 1.2340 in Thursday night's trading session, although not far from the July 06 low. This situation triggers a great position for that pair. 

As a country with oil as a major export commodity, today's drop in oil prices has had an impact on the Canadian dollar. Oil prices slipped due to profit-taking by investors.

That comes with the indications that the rally in oil prices was overbought. The Rising oil prices are contributing to the inflationary pressures which is happened so far. 

Based on data released on Wednesday, the Canada's Consumer Inflation (CPI) grew by 0.2% in September, breaking estimates of a decline to 0.1%. Annual inflation accelerated to an 18-year high in September.