Company: FXY
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0000950170-25-027263
Chunk: 62

Company: Invesco CurrencyShares Japanese Yen Trust
Filing Date: 2025-02-26
Form: 10-K
Item: Item 7
Chunk 62
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 the full and direct impact of Fed easing expectations, rising geopolitical tensions, and the US banking sector turmoil on the Trust's net comprehensive income (loss) during the years ended December 31, 2024 and 2023 cannot be known, it is believed that they have each independently impacted the Closing Spot Rate, the interest rate paid by the Depository, and the global economy and markets generally, including the number of Shares created and redeemed by the Trust.

Despite the strong rally in the third quarter, the Japanese yen (JPY/USD) still ended 2024 sharply lower. The pair was heavily pressured in the first half of the year, with prices sliding to the weakest level against the US dollar in over three decades as the BoJ stayed committed to its ultra-loose monetary policy, while the Fed kept on with its higher-for-longer rhetoric amid sticky US inflation. However, the pair managed to make a strong comeback in the third quarter, erasing most of its previous losses, with the surprise Japanese rate hike in July boosting the yen, while the kickoff of the Fed’s easing cycle and other US macro concerns pressured the dollar. That said, all those gains were erased in the fourth quarter as Trump’s victory sent the greenback skyrocketing. Many of the president’s campaigned policies were expected to raise inflation risk, potentially leading to higher rates in 2025. In addition, tariffs generally weigh on foreign currencies, further boosting the USD. 

The Japanese yen (JPY/USD) continued its decline in 2023, now down nearly 30% in the last three years. While in mid-Jan, the yen did surge on speculation that the Bank of Japan (BoJ) was going to change its ultra-loose monetary and yield curve control policies after the BoJ allowed the key long-term government bond yield to move in a wider range, the central bank quickly defied this with its announcement to remain status quo. As a result of this and a strengthening dollar through February and early March, the currency pair plunged. While the yen did recover quite significantly for the remainder of March as the dollar weakened on U.S. banking sector turmoil, prices returned to tumbling in the second quarter. Like the first quarter, the BoJ remained ultra-committed to its dovish monetary policy while other central banks hiked, causing global interest rate differentials to the JPY to widen even further. Third quarter was a continuation of the same “ultra-low” narrative, though renewed U.S. dollar strength added additional pressure. While the