Week in review
The USD/JPY opened at 152.02 on 17 February, then fell to around 151.50 as yen buying dominated early trading after Japan's 4Q real GDP growth of an annualized +2.8% QoQ significantly beat market expectations. Fed officials, including Governors Michelle Bowman and Christopher Waller, made comments suggesting no imminent change in policy rates, but markets saw little new information in their remarks, and the USD/JPY remained top-heavy around 151.50. On 18 February, early yen selling helped lift the pair back into the 152 range. The upside was capped, but the dollar found support after President Donald Trump announced plans to impose a 25% tariff on automobiles and other goods, keeping the USD/JPY steady around 152. The pair briefly fluctuated on 19 February following headlines from BOJ board member Hajime Takata's speech but fell to the 151 level as the markets ultimately interpreted his remarks and subsequent press conference as slightly hawkish overall. The yen strengthened further on 20 February, and selling pressure intensified after BOJ Governor Kazuo Ueda visited Prime Minister Shigeru Ishiba at the Prime Minister's Office around midday. The USD/JPY fell below 150 for the first time in two months around the time overseas trading began. The pair remained top-heavy and fell to below 149.50 as lower UST yields added to dollar weakness after Treasury Secretary Scott Bessent said the US Treasury would not change its bond issuance plans. Japan's CPI for January, released early on 21 February, showed growth at 4.0% YoY. This was in line with market expectations, briefly pausing yen gains. However, the USD/JPY rose rapidly back to around 150.50 due to a decline in JGB yields after Governor Ueda told the Lower House Budget Committee that the Bank would increase JGB purchases flexibly if long-term yields rose sharply (Figure 1). Overall, this week saw broad dollar weakness and yen strength. The Canadian dollar and the euro were relatively weak (Figure 2).
FIGURE 1: USD/JPY
Note: Through 12:00 JST on 21 February
Source: EBS, Refinitiv, MUFG
FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK
Note: Through 12:00 JST on 21 February
Source: Bloomberg, MUFG
