Japanese Yen Today - The Japanese Yen (JPY) attracted interest as a safe haven at the beginning of this week, bringing the USD/JPY pair down from a three-week high around 146.00. Economic turmoil in China and geopolitical risks have diminished the likelihood of Federal Reserve (Fed) policy easing, impacting investor sentiment and supporting JPY as a safe haven.

However, concerns regarding negative interest rate policies by the Bank of Japan (BoJ) during the meeting on January 22-23 were alleviated following the New Year’s Day earthquake in Japan, limiting further JPY strengthening. The US Dollar (USD) has struggled to capitalize on its recent recovery after hitting multi-month lows, with speculation that the Fed may start to lower interest rates by early March.

Nevertheless, newly released US economic data indicates that the economy remains strong, giving the Fed a greater opportunity to keep interest rates high for a longer period. This, along with hawkish statements from Fed officials recently, continues to support the rise in US Treasury bond yields. Ultimately, this situation is seen as a driver for the Dollar's value and provides support for the USD/JPY pair, but caution is advised before making clear betting decisions.

Daily Market Movers Summary:

  1. The Japanese Yen fell more than 2% last week, marking its worst weekly performance since June 2022, as hopes for a change in the Bank of Japan's policy faded. The US Dollar strengthened after strong US employment reports pushed the USD/JPY pair to a three-week high.
  2. NFP data showed robust US job growth, surpassing expectations with an addition of 216,000 new jobs. However, the ISM survey indicated a decline in the US services sector, suggesting economic weakness despite overall strength. Additionally, US factory orders increased but did not significantly impact the USD.
  3. Dallas Fed President Lorie Logan warned of rising inflation risks if financial conditions remain insufficiently tight, while Richmond Fed President Thomas Barkin expressed optimism about the economy. Nonetheless, the market still anticipates the possibility of the Fed's first rate cut in March, limiting the USD's gains and the USD/JPY pair.
  4. Attention now shifts to US consumer inflation numbers following a maximum spending cap agreement reached to avoid a government shutdown.


Warning!

This analysis is based on fundamental and technical views from reliable sources and is not intended as advice or solicitation. Always remember that this content aims to enrich readers' information. Always conduct independent research regarding other forex information to serve as a reference in your trading.

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