Japanese Yen remains flat; USD/JPY stays around 156.00
According to FXStreet, on January 23, the Japanese Yen (JPY) did not have many major fluctuations. Investors who are waiting for the key policy meeting of the Bank of Japan (BoJ) on Friday should stay on the sidelines. However, expectations that the BoJ will soon raise interest rates are still a positive factor supporting the Yen. In addition, Japan's trade data beat expectations to help the JPY maintain its strength.
Meanwhile, the US Dollar (USD) has a weak performance as the market believes that the US Federal Reserve (Fed) will cut interest rates twice this year. This has prevented the USD/JPY pair from continuing its upward momentum since yesterday, when it reached a one-week high. However, concerns about President Donald Trump's tax policies and optimism in the market limit the appeal of the Yen - which is a safe asset.
The market awaits President Donald Trump's speech and the decision from the BoJ
The Yen increased slightly after data showed that Japan had a trade surplus of 130.9 billion yen in December, instead of a deficit as expected. This result was thanks to exports increasing by 2.8% over the same period last year, although lower than the 3.8% increase in the previous month. Meanwhile, imports increased by 1.8%, lower than forecast, showing weak domestic demand.
Annual wage negotiations in Japan have kicked off, with businesses and unions agreeing that wages for workers should be raised to cope with rising prices. The BoJ, which is scheduled to announce its policy decision on Friday, has repeatedly stressed that interest rate hikes only come when wages are steady and widely increased.
The market now believes there is a more than 90% chance that 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 goes against expectations that the Fed will cut interest rates twice this year as US inflationary pressures ease.
In addition, slightly rising US Treasury yields helped the USD maintain stability at its lowest level in the month, supporting the USD/JPY pair. Investors are now waiting for US weekly unemployment benefits data, President Donald Trump's speech and the results of the BoJ meeting on Friday to orient their next trading.
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.
