According to FXStreet, on January 15, the Japanese Yen (JPY) increased sharply after Bank of Japan (BoJ) Governor Kazuo Ueda made statements hinting at a possible interest rate hike.
This caused the USD/JPY exchange rate to fall to around 157.50. Previously, BoJ Deputy Governor Ryozo Himino also mentioned the possibility of raising interest rates in January or March, in the context of rising inflation in Japan.
However, some investors believe the BoJ may wait until spring wage talks to act. In addition, the widening yield gap between the U.S. and Japan as the Fed continues to take a hawkish stance on interest rates has made investors reluctant to place large bets on the low-yielding yen. In addition, bullish market sentiment could also dampen the yen's appeal as a safe haven.
Household spending and real wages in Japan continued to fall in November for the fourth straight month, as prices rose, raising the possibility that the Bank of Japan will raise interest rates in January or March.
Deputy Governor Ryozo Himino said the BoJ would discuss raising interest rates at its January meeting, but gave no clear signal. Meanwhile, Governor Kazuo Ueda stressed that the BoJ is ready to adjust policy if the economy and prices continue to improve.
Some economists predict the BOJ may wait until after the outcome of spring wage negotiations before taking action. Meanwhile, the Reuters Tankan survey showed Japanese manufacturers' confidence rebounded in January, but the outlook remained uncertain due to concerns about President-elect Donald Trump's economic policies.
The yield on the 10-year US Treasury note remains near a 14-month high, buoyed by expectations that the Fed will not cut interest rates again this month. The US jobs report was also positive, but the lower-than-expected increase in the producer price index (PPI) left investors uncertain about the Fed's next move.
Specifically, the US PPI in December increased by 3.3% compared to the same period last year, higher than the previous 3.0% but still lower than the forecast of 3.4%. This contributed to the US Dollar continuing to depreciate from its recent two-year peak, putting pressure on the USD/JPY exchange rate.
Traders are now looking ahead to the US Consumer Price Index (CPI) data for more information. The December CPI is expected to rise 0.3%, bringing the annual rate to 2.9% (up from 2.7% in November). Meanwhile, the core CPI is expected to hold steady at 3.3%.
According to Lao Dong, updated at 12:00 on January 15, the USD/JPY exchange rate is currently fluctuating around 157.212 USD/JPY, meaning 1 USD can be exchanged for about 157 JPY.
