The Japanese Yen (JPY) is on a three-day streak of consecutive price increases, heading towards its highest level since December 2024, thanks to expectations that the Bank of Japan (BoJ) will continue to raise interest rates. The main reason is that strong GDP data just released this morning, February 17, shows that the Japanese economy is growing steadily.
Not only that, optimism about the possibility of delaying US President Donald Trump's counterpart tariffs and the narrowing of the US-Japan interest rate gap are also boosting demand for the Yen, a safe-haven asset.
In addition, the USD is under selling pressure, causing the USD/JPY pair to fall to a one-week low, fluctuating around 151.00. However, investors are still cautious about the potential impacts of Trump's policies. In addition, the possibility of the Fed continuing to maintain a "hawl" stance could support the USD and limit the decline of this currency pair.
Data released today shows that the Japanese economy grew 0.7% in the fourth quarter, higher than the 0.4% of the previous quarter (adjusted). Annual growth rate also jumped from 1.7% to 2.8%, further strengthening confidence that the BoJ will continue to raise interest rates to control inflation.
Japanese Economy Minister Ryosei Akazawa was optimistic that the economy will continue to recover, but still need to be vigilant against risks from the global economy.
In a related development, Japanese media reported that the country has proposed a US exemption from the 25% tariff on steel and aluminum that Trump wants to impose. This comes after Trump ordered the development of a countervailing tax plan on countries that tax US imports, although the specific tax rate has not yet been announced.
At the same time, disappointing US retail sales data has caused the USD to continue to weaken. The US Bureau of Population Research said retail sales fell 0.9% in January, much worse than the forecast of a 0.1% decline and a 0.7% increase in December.
In addition to economic issues, geopolitical tensions are also attracting attention. US Secretary of State Marco Rubio said that the talks with Russia this week will be an opportunity to assess President Putin's seriousness in pursuing peace. Trump also said he is actively working to reach a peace deal and hopes to meet Putin soon to discuss an end to the war in Ukraine.
According to Lao Dong at 12:00 on February 17, 2025, the Yen increased to 151.583 USD/JPY.
