According to FXStreet, on January 20, the Japanese Yen increased in value, USD/JPY fell below 156.00.
The Japanese Yen (JPY) attracted investors' attention after Japan released upbeat Core Machinery Orders data, helping to recover some of the losses from late last week. Meanwhile, expectations that the Bank of Japan (BoJ) will raise interest rates at its meeting this week also supported the JPY. This, combined with a slight decline in the US Dollar (USD), pushed the USD/JPY pair below 156.00 during the Asian session on Monday.
However, investors remained cautious amid uncertainties surrounding incoming US President Donald Trump’s trade policies and a generally upbeat market mood, making them less likely to bet heavily on the safe-haven yen. In addition, expectations that Trump’s policies could push up inflation and prompt the Federal Reserve to maintain high interest rates could limit the dollar’s decline. Investors also tended to wait for Trump’s inauguration speech later in the day and the BoJ meeting on Thursday.
Data released Monday morning showed that Japan’s core machinery orders rose 3.4% in November, the strongest growth in nine months, marking the second straight monthly gain, indicating a clear recovery in the country’s manufacturing sector.
Rising inflation and steady wage growth, along with comments from BoJ officials, have also raised expectations that the bank will raise interest rates this week. BOJ Deputy Governor Ryozo Himino said the January 23-24 meeting will discuss a rate hike amid solid wage growth and a clearer picture of the U.S. policy environment under Trump.
BoJ Governor Kazuo Ueda also stressed that the wage outlook is positive, and that the BoJ will be ready to raise interest rates further this year if the economy continues to improve. A BoJ report also showed that wage increases have spread to many businesses, strengthening the case for an early rate hike.
Investors, however, remain cautious and are likely to wait for Trump's speech and the upcoming key BoJ meeting before making any major moves.
In the US, the latest data showed that core inflation is slowing, raising expectations that the Fed may consider cutting interest rates in 2025. Fed Governor Christopher Waller also said that inflation may continue to decline, and the Fed is likely to cut interest rates 3-4 times this year.
Housing data also showed a recovery, with housing starts rising 3.3% in December – the highest since February 2024. However, building permits fell slightly, down 0.7%, which was a bit disappointing.
The yield on the 10-year US government bond rose again after hitting a two-week low, supporting the US dollar and helping the USD/JPY pair limit further losses.
According to Lao Dong, updated at 12:00 on January 20, the USD/JPY exchange rate is currently fluctuating around 155.932 USD/JPY, meaning 1 USD can be exchanged for about 156 JPY.
