Japanese Yen continues to appreciate as USD weakens
According to FXStreet, on March 3, the Japanese Yen (JPY) recorded a slight increase during the day, while the US Dollar (USD) was under selling pressure. This caused the USD/JPY pair to fall below 150.50 in the Asian trading session. The main reason comes from expectations that the Bank of Japan (BoJ) will continue to raise interest rates. This helps Japan's JGB (Japan Government bond) yield remain high, giving the Yen an advantage.
However, Yen buyers are still cautious. BoJ Governor Kazuo Ueda warned last week that US President Donald Trump's tax policies could affect the global economy, and this needs to be carefully considered when making decisions on monetary policy.
However, the possibility of a strong increase in the USD/JPY pair is still limited. The reason is that the market expects the US Federal Reserve (Fed) to cut interest rates in the coming time, reducing the strength of the USD.
Concerns about Trump's tax policy make Japanese Yen buyers cautious
The latest economic data shows that Japan is growing steadily, while inflation remains high. This reinforces expectations that the BoJ will continue to raise interest rates, thereby helping the Japanese Yen maintain its strength.
Some sources from Japanese media said the BoJ could be pressured by the US to raise interest rates if the White House believes the weakening of the Yen is due to Japan's monetary policy.
In manufacturing, Japan's PMI released by au Jibun Bank reached 49.0 in February, up from 48.9 in the preliminary report. This shows that production activities are gradually improving, with the slowest decline rate in the past three months.
Meanwhile, US President Donald Trump has confirmed plans to impose tariffs on imports from Canada and Mexico, starting on Tuesday. He also announced that he would double the 10% tax rate on imported goods from China.
USD under pressure after US inflation data
The USD is having difficulty maintaining its upward momentum. The currency took a strong rally on Friday after the release of key US inflation data. However, pressure from other factors has caused the USD to weaken again, weighing on the USD/JPY pair.
According to a report from the US Bureau of Economic Analysis, the personal consumption expenditure (PCE) price index the Feds preferred inflation measure fell from 2.6% to 2.5% in January. In addition, the core PCE index (excluding food and energy prices) also decreased from 2.9% to 2.6% over the same period last year.
These figures further reinforce expectations that the Fed will start cutting interest rates in June, and may continue to cut further in September. Investors are now awaiting US ISM manufacturing PMI data later on Monday, while the focus remains on the non-farm payrolls report on Friday.
According to Lao Dong, at 12:00 on March 3, 2025, the Yen exchange rate is currently anchored around 150.492 JPY/USD, the Yen decreased slightly by about 0.02%.
