Japanese Yen Flat; USD/JPY Stable Around 156.00
According to FXStreet, the Japanese Yen (JPY) did not have many major fluctuations on January 23. Investors are waiting for the important policy meeting of the Bank of Japan (BoJ) on Friday, so they chose to stay on the sidelines. However, the expectation that the BoJ will soon raise interest rates is still a positive factor supporting the Yen. In addition, the trade data from Japan exceeded expectations, helping the JPY maintain its strength.
Meanwhile, the US dollar (USD) was weak as the market believed that the US Federal Reserve (Fed) would cut interest rates twice this year. This prevented the USD/JPY pair from continuing its rally from yesterday, when it hit a one-week high. However, concerns about President Donald Trump's tax policies and the market's optimism limited the safe-haven appeal of the Yen.
Markets await President Donald Trump's speech and BoJ decision
The yen rose slightly after data showed Japan posted a trade surplus of ¥130.9 billion in December, instead of a deficit as expected. The result was helped by a 2.8% year-on-year increase in exports, though down from a 3.8% increase in the previous month. Imports rose 1.8%, less than expected, suggesting domestic demand remained weak.
Annual wage talks in Japan have begun, with businesses and unions agreeing that workers need to raise wages to cope with rising prices. The Bank of Japan, which is due to announce its policy decision on Friday, has repeatedly stressed that rate hikes will only happen if wages rise steadily and broadly.
Markets now believe there is a more than 90% chance the BoJ will raise interest rates from 0.25% to 0.50% at the end of the meeting, the highest level since the 2008 global financial crisis. This contrasts with expectations that the Fed will cut rates twice this year as inflation pressures in the US ease.
In addition, a slight increase in US Treasury yields helped the USD to remain stable above its lowest level in a month, supporting the USD/JPY pair. Investors are now waiting for the US weekly unemployment data, President Donald Trump's speech and the results of the BoJ meeting on Friday for further trading direction.
According to Lao Dong, updated at 12:00 on January 23, the USD/JPY exchange rate is currently fluctuating around 156.679 USD/JPY, meaning 1 USD can be exchanged for about 156.5 JPY.
