Japanese Yen plummets
According to FXStreet, on February 12, the Yen (JPY) continued to decline for the week, marking the third consecutive day of depreciation. In today's trading session, the JPY fell to its lowest level in a week against the USD. The main reason comes from concerns that US President Donald Trump's un exceptional import tax policy could affect Japan's economic recovery. In addition, optimism in the market has also made the JPY considered a safe-haven asset less attractive.
At the same time, Federal Reserve Chairman Jerome Powell said on Tuesday that the central bank has no plans to cut interest rates immediately. He is concerned that Trump's trade policies could increase inflation. This has further strengthened the US dollar, pushing the USD/JPY pair above 153.00. However, the Bank of Japan's (BoJ) interest rate hike plan could help the JPY hold some of its position as traders await inflation data from the US.
President Donald Trump fuels trade tensions, JPY under great pressure
President Donald Trump has just signed a decree imposing a 25% tariff on imported steel and aluminum from March 12. He also hinted at the possibility of additional tariffs on cars, pharmaceuticals and computer chips, and pledged to introduce counterpart tariffs to "re contest" other countries' tax policies on US goods.
This information immediately raised concerns about escalating global trade tensions, which could negatively affect the Japanese economy. This has put the JPY under strong downward pressure, while USD/JPY continues to recover from a two-month low (both below 151.00 last week).
Japanese Finance Minister Katsunobu Kato said on Wednesday morning that he would assess the impact of US tariffs on the Japanese economy and take appropriate response measures. Meanwhile, Japanese Industry Minister Yoji Muto has proposed that the US exempt Japan from steel and aluminum tariffs, but this move does not seem to be enough to save the JPY's decline.
On the other hand, Fed Chairman Jerome Powell, in his hearing before the Senate Banking Committee on Tuesday, made some rather "happy" statements. He affirmed that the US economy remains strong, the labor market is stable, and inflation, although close to the 2% target, is still higher than expected. This shows that the Fed is not in a hurry to cut interest rates.
Meanwhile, Bank of Japan (BoJ) Governor Kazuo Ueda continued to emphasize that the BoJ will operate monetary policy flexibly to achieve the 2% inflation target. The latest data on rising wage growth and inflationary pressures could prompt the BoJ to make another rate hike at its March policy meeting.
Now, all eyes are on the upcoming US consumer inflation data, along with Powell's next statements. The US Comprehensive Consumer Price Index (CPI) is expected to increase 2.9% year-on-year in January, while the core CPI (excluding food and energy) could reach a 3.1% increase. These figures will determine the next trend of the USD and the USD/JPY pair.
According to Lao Dong at 12:00 on February 12, 2025, the Yen decreased to 153.690 USD/JPY.
