According to FXStreet, on January 20, the Japanese Yen appreciated, USD/JPY decreased below 156.00.
The Japanese Yen (JPY) attracted investors' attention after Japan released positive core Machinery Orders data, helping to recover some of last weekend's downward trend. At the same time, expectations that the Bank of Japan (BoJ) will raise interest rates at this week's meeting also supported the JPY. This, combined with a slight decrease in the US Dollar (USD), pushed the USD/JPY pair below 156.00 in the Asian trading session on Monday.
However, investors are still cautious about the uncertainties surrounding the trade policy of incumbent US President Donald Trump and the general optimistic market sentiment. This makes them less interested in betting heavily on the Yen - a safe-haven asset. In addition, expectations that Trump's policies could push up inflation and force the US Federal Reserve (Fed) to maintain high interest rates could reduce the USD's depreciation. Investors also tend to look ahead to Trump's inauguration speech later in the day and the BoJ meeting on Thursday.
Data released on Monday morning showed that core machinery orders in Japan increased by 3.4% in November 2024, achieving the strongest growth rate in 9 months. This is the second consecutive month that the index has increased, showing a clear recovery in Japan's manufacturing sector.
In addition, rising inflation and steady wage growth, along with comments from BoJ officials, further increased expectations that the bank will raise interest rates this week. BoJ Deputy Governor Ryozo Himino said the meeting on January 23-24 would discuss raising interest rates, as sustainable wage growth and the US policy situation under Trump become clearer.
BoJ Governor Kazuo Ueda also stressed that the wage outlook is positive, and the BoJ will be ready to raise interest rates further this year if the economy continues to improve. A report from the BoJ also shows that salary increases have spread to many businesses, strengthening conditions for making early decision to increase interest rates.
However, investors are still reserved and tend to wait for Trump's speech and the upcoming important BoJ meeting before making major moves.
In the US, the latest data shows core inflation is slowing, raising expectations that the Fed may consider cutting interest rates in 2025. Fed Governor Christopher Waller also said inflation could continue to fall, and the Fed is likely to cut rates 3-4 times this year.
Housing market data also showed a recovery, with the number of houses starting to be built (Housing Starts) increasing by 3.3% in December - reaching the highest level since February 2024. However, the Building Permits decreased slightly by 0.7%, causing some disappointment.
The yield on the 10-year US government bond returned after hitting a two-week low, supporting the USD and helping the USD/JPY pair limit further declines.
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.
