JPY Weekly - 14 January 2025
- Jan 14, 2025
Week in review
The USD/JPY opened at 157.54 following Japan's New Year holiday. On 6 January, yen selling from the morning in the Tokyo session drove the pair to the upper 157 range, but the dollar was sold early in US trading hours and the pair fell to a low for the week of 156.25 following reports that the second Trump administration would only impose tariffs on critical imports. However, the USD/JPY rebounded to around 157.50 as Trump quickly denied the reports. On 7 January, the USD/JPY rose above 158 amid yen selling early in the Tokyo session. Warnings from Finance Minister Katsunobu Kato curbed upside and the USD/JPY fell to around 157.50, but the pair rose back to around 158.50 in US trading hours following a stronger-than-expected ISM non-manufacturing index. Comments from Trump that interest rates are too high pushed the USD/JPY down to above 157.50. The pair continued to trade around 158 through European trading hours on 8 January, then moved to a high for the week of 158.55 following reports that Trump is thinking about declaring a national economic emergency to impose tariffs. In US trading hours, the pair became top-heavy as the ADP employment report fell short of market expectations and Fed Governor Christopher Waller maintained his stance on rate cuts. On 9 January, the USD/JPY fell to the high 157 range driven by yen buying after the monthly labor survey released in the morning Tokyo time exceeded market expectations. The USD/JPY rebounded to the low 158 range as headlines highlighted caution regarding wage increases in the BOJ's Sakura Report, but the pair fell back to around 157.50 driven by yen cross rates as the sterling weakened sharply during European trading hours. The pair subsequently recovered to the low 158 range due to a series of hawkish comments from senior Fed officials. The USD/JPY was trading around this level at the time of writing on 10 January (Figure 1). The foreign exchange market started the year with the dollar strong across the board. Dollar strength continued this week, but its momentum appears to be softening overall (Figure 2).
FIGURE 1: USD/JPY
Note: Through 13:00 JST on 10 January
Source: EBS, Refinitiv, MUFG
FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK
Note: Through 13:00 JST on 10 January
Source: Bloomberg, MUFG