USD weakens
According to Lao Dong, on February 14, the Yen maintained its upward momentum. The main reason is US President Donald Trump's decision to postpone the tax, raising concerns about US trade policy. At the same time, the USD lost momentum as US bond yields fell along the entire yield curve.
The DXY index a measure of the strength of the greenback against other major currencies continues a four-session streak of decline, currently trading around 107.00. The yield on the US 2-year and 10-year government bonds was at 4.31% and 4.53%, respectively, showing that interest rate expectations are gradually changing.
Meanwhile, core PPI inflation in the US increased to 3.6% in January, higher than the forecast of 3.3%, but still lower than the 3.7% adjustment. This makes investors believe that the US Federal Reserve (Fed) may delay interest rate cuts until the second half of 2025. If inflation continues to remain high, the Fed could keep interest rates in the range of 4.25%-4.50% longer than expected.
Yen benefits from PPI data
Japanese Economy Minister Ryosei Akazawa said that the Japanese government will take appropriate action in response to US tax measures. He also admitted that the weak Yen is having many impacts on the Japanese economy.
The Japanese Yen received support after Japan's PPI data released on Thursday was higher than expected, raising the possibility that the Bank of Japan (BoJ) will continue to raise interest rates. Increased inflationary pressures, along with steady wage growth, are reinforcing confidence that the BoJ will maintain a monetary tightening stance in the coming time.
In short, USD/JPY is under pressure from both sides: the US dollar is weak due to falling yields and US policy instability, while the Yen is supported by expectations of a BoJ rate hike. Investors are now waiting for US retail sales data to provide more clear signals for the next trend.
According to Lao Dong at 12:00 on February 13, 2025, the Yen increased to 152.631 USD/JPY.
