Japanese Yen weakens against USD
According to FXStreet, on February 3, the Japanese Yen (JPY) depreciated against the USD, continuing to leave the highest level in more than a month reached last week. The main reason is that the market is concerned about the economic impact of the new tax policy of US President Donald Trump.
However, the JPY's decline was limited by expectations that the Bank of Japan (BoJ) will continue to raise interest rates. The latest report from the BoJ shows that policymakers are considering raising interest rates further. Tokyo's inflation is rising at the fastest pace in nearly a year, further strengthening the possibility that the BoJ will continue to tighten monetary policy.
In addition, the narrowing interest rate gap between Japan and other countries, along with risk-off sentiment in the market, could help the Yen hold on and avoid further depreciation.
Expectations of increasing interest rates still give the Yen an advantage
Recently, President Trump signed an order to impose a 25% tariff on imports from Canada and Mexico, along with a 10% tariff on goods from China.
Immediately afterwards, Canadian Prime Minister Justin Trudeau, Mexican President Claudia Sheinbaum and the Chinese Ministry of Foreign Affairs spoke out in protest and expected retaliatory measures.
Meanwhile, the US dollar is rallying strongly again, approaching a more than two-year high, helping the USD/JPY pair continue to rise.
The Bank of Japan also stressed that if the economy and prices remain stable, it will continue to raise interest rates. However, this information did not help the Yen strengthen immediately.
Japanese Finance Minister Katsunobu Kato said the government will monitor the impact of Trump's new tax on the JPY exchange rate, as there are many concerns about negative impacts.
Currently, the yield gap between the US and Japan is at its lowest level in many weeks, which, along with risk concerns, could help the Yen avoid depreciation too much in the coming time.
Investors are waiting for important US economic data this week, especially the ISM manufacturing PMI index later today. But the focus is still on Nonfarm Payrolls (NFP)'s jobs report on Friday, which will have a big impact on the financial market.
According to Lao Dong at 12:00 on February 3, 2025, the Yen decreased to 155.708 USD/JPY, meaning 1 USD could be exchanged for about 155 JPY.
