The Japanese Yen (JPY) continued to attract buyers for the second consecutive day, moving closer to its highest level in many weeks against the US Dollar (USD) in the morning trading session on January 30. The main reason is that there are increasing predictions that the Bank of Japan (BoJ) will continue to raise interest rates. In addition, the yield gap between the US and Japan is narrowing, causing many investors to shift to the Yen - a currency with lower yields.
However, investors are still concerned that former US President Donald Trump's trade policies could lead to a global trade war, which could make traders more cautious when investing in the Yen.
At the same time, the US Federal Reserve (Fed) keeping interest rates unchanged on Wednesday but still having a "hawl" view (supporting high interest rates) is creating momentum for the USD. Traders are now awaiting a meeting of the European Central Bank (ECB), an event that could cause market volatility and increase demand for the Yen - a safe asset.
Minutes from the December meeting of the Bank of Japan released on Wednesday showed that members had discussed raising interest rates based on the current economic situation.
Mr. Makoto Sakurai, a former member of the BoJ's board of directors, commented on Tuesday that widespread salary increases, prices with a steady uptrend and a solid economy could help the BoJ continue to gradually raise interest rates.
Meanwhile, the US Federal Reserve (Fed) decided to keep interest rates unchanged after a two-day meeting, and confirmed that there are no plans to cut interest rates in the near future. Fed Chairman Jerome Powell said the central bank does not need to rush to change policy and the current interest rate is still in line with the economic situation.
Powell's comments reinforce beliefs that US interest rates will remain higher than expected, especially amid concerns that Trump's trade protectionist policies could push up inflation and support the US dollar.
The yield on the 10-year US government bond has yet to increase sharply after a recovery from its lowest level in more than a month, due to uncertainty about the Trump administration's trade policy.
According to Japan's Asahi newspaper, a meeting between Japanese Prime Minister Shigeru Ishiba and former US President Donald Trump in Washington is scheduled to take place on February 7.
In addition, the European Central Bank (ECB) policy decision later today could cause strong fluctuations in the financial market. In addition, the US preliminary GDP report for the fourth quarter will also be an important factor affecting the USD/JPY pair.
According to Lao Dong at 12:00 on January 30, 2025, the Yen increased to 154.589 USD/JPY, meaning 1 USD could be exchanged for about 154 JPY.
