There are a number of reasons why the Japanese Yen is rising. It's up because of the possibility of more US interest rate hikes in the next couple of years, and it's up because of the possibility of even more turmoil in Europe.
China's influence on Japanese trade policy continues to be of significance. But it's also because China is worried about deflation and instability in the European Union. The Chinese government has made it clear that deflation will not be tolerated and we have seen that these assurances have not had much effect on investor sentiment.
As for the European Union, it's a problem because the European Union seems to be in chaos and the European government has been operating at a snail's pace. If the European government had a better track record, things would have been quite different. The problems in the EU have forced the ECB to put massive amounts of money into the system in order to provide liquidity and bolster confidence.
However, the presence of a strong US Dollar is most concerning to the people of Japan. This is why Tokyo's yields have risen more than the yields in New York. Obviously, if the Japanese government should decide to devalue the Yen, it would make sense for it to do so by boosting the Yen through interest rate hikes. So we can see that the factors which tend to push up the Yen's value are almost always global in nature.
When one looks at the specifics of economic policies, there is no question that more than a little influence is coming from the US. The same is true for interest rates.
Thus, we can see that there is a global component to the rise in the Japanese Yen, and it is global because more US interest rates are being raised. It may seem odd that an economic policy which is so closely tied to the US economy would have a global component. After all, when the Fed is raising interest rates, shouldn't other nations be doing the same?
Well, the answer is that it depends on where the US is concerned. Indeed, if the US is not raising interest rates, it means that the world is suffering from a large shortage of liquidity.
Another counter-argument, which is very important, is that for the Eurozone, there is no question that deflation is an issue. If we can all agree that deflation is bad, then deflation can be seen as a reason for the rise in the Yen and thus be seen as good news for investors.
Yet another thing that influences the rise in the Yen is because the Japanese government is open to negotiations. Just because the Yen rises doesn't mean that there won't be renewed yen speculation in the future. As long as the Yen rises in value, the possibility of substantial yen speculation is going to be there.
If you're interested in learning more about the Japanese Yen outlook, you can visit Trading Economics. They've done some wonderful studies on the Japanese Yen so far, and we're sure that the yen is only going to rise higher!
Indeed, they've also done some counter-arguments as well. The last time that the Japanese Yen went down a lot (in March of 2020), it was because the US was expected to raise interest rates substantially in the following months.