The Japanese Yen (JPY) is trading steady but still under pressure against the US Dollar, with USD/JPY holding around 157.00. Comments from Bank of Japan (BoJ) Deputy Governor Ryozo Himino have raised concerns about when the BoJ will raise interest rates again. In addition, the widening interest rate differential between the US and Japan, reinforced by the US Federal Reserve's rate-hike stance, has further reduced the appeal of the low-yielding Yen.
Meanwhile, news that US President-elect Donald Trump’s economic advisory team is considering a gradual increase in import tariffs boosted investor confidence and reduced demand for safe-haven assets such as the JPY. However, US government bond yields fell slightly as concerns over Trump’s tax policies eased, helping to limit the JPY’s decline and keeping USD/JPY from breaking above 158.00. Investors are now waiting for US Producer Price Index (PPI) data for short-term trading opportunities.
BOJ Deputy Governor Ryozo Himino said the BOJ is on track to raise interest rates but needs to carefully consider domestic and external risks. Some investors expect the BOJ to wait until April to ensure wage growth is stable during spring talks before deciding on further rate hikes.
Japanese Economy Minister Ryosei Akazawa also said that the BoJ's consideration of raising interest rates does not conflict with the government's goal of escaping deflation and that the two sides are working well together. Rising inflation in Japan is opening up the possibility of the BoJ raising interest rates in January or March, with the market predicting a more than 50% chance of such a move at the upcoming meeting.
On the US side, Bloomberg reported that President-elect Trump’s economic team is considering gradually increasing import tariffs to control inflation. This has caused US government bond yields to fall slightly and triggered a sell-off of the USD from a two-year high. However, the Fed’s tough stance along with the recent positive jobs report has dimmed the possibility of a rate cut in 2025, thereby supporting the USD.
The yield on the 10-year US government bond fell from a 14-month high as investors awaited key inflation data, starting with the PPI index due later today.
According to Lao Dong, updated at 3:00 p.m. on January 14, the USD/JPY exchange rate is currently fluctuating around 157.512 USD/JPY, meaning 1 USD can be exchanged for about 157 JPY.
