The Japanese Yen (JPY) is trading steadily but is still under pressure against the US Dollar, with the USD/JPY pair remaining around 157.00. comments from Deputy Governor of the Bank of Japan (BoJ) Ryozo Himino have made the market worried about when the BoJ will raise interest rates again. In addition, the growing interest rate gap between the US and Japan, reinforced by the US Federal Reserve's (Fed) interest rate hike stance, further reduces the attractiveness of the low-interest Yen.
Meanwhile, news that US President-elect Donald Trump's economic advisory group is considering slowly raising import tariffs has boosted investor confidence and reduced demand for safe-haven assets such as the JPY. However, US government bond yields fell slightly due to concerns about Trump's tax policy cooling down, helping to limit the decline of the JPY and preventing the USD/JPY pair from surpassing 158.00. Currently, investors are waiting for the US Producer Price Index (PPI) data to find short-term trading opportunities.
BoJ Deputy Governor Ryozo Himino said the BoJ is aiming to raise interest rates but needs to be cautious about domestic and foreign risks. Some investors expect the BoJ to wait until April to ensure a stable salary increase in spring negotiations before deciding to raise interest rates further.
Japanese Economy Minister Ryosei Akazawa also affirmed that the BoJ's consideration of raising interest rates is not in contradiction with the government's goal of escaping decline and the two sides are coordinating well. 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 making this move at the upcoming meeting.
For the US side, a report from Bloomberg said that President-elect Trump's economic team is considering gradually increasing import tariffs to control inflation. This has caused US government bond yields to decline slightly and triggered the sale of the USD from the peak of the past two years. However, the Fed's tough stance and recent positive jobs reports have made the possibility of a rate cut in 2025 blurred, thereby supporting the USD.
The yield on the 10-year US government bond has fallen from a 14-month high as investors await important inflation data, starting with the PPI index due 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.
