- The Japanese Yen (JPY) is rising for a second day
- Strong Japanese wage growth and PMI data boost rate hike bets
- The US Dollar (USD) falls as trade war fears ease
- US ISM services was weaker than forecast at 52.8
The US dollar Japanese yen (USD/JPY) exchange rose is falling on Wednesday for a third straight day. The pair fell 0.30% in the previous session, settling on Tuesday at 154.15. At 18:30 UTC, USD/JPY trades 1.21% lower at 152.29 and is in a range of 152.12 to 154.13.
The Japanese yen has risen to its highest level since mid-December against the dollar, boosted by shifting expectations surrounding Bank of Japan rate hikes.
The end has surged off the strong Japanese wage growth, PMI and earnings basting expectations of a rate hike in July to over 50%.
Last week, Bank of Japan governor Ueda emphasised that the policy goal is to achieve sustainable 2% inflation.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is down 0.44% to 107.49 at the time of writing, marking the second day of losses.
The U.S. dollar is falling lower, dropping 2 to its lowest point in over a week, as concerns over a global trade war faded and after weaker-than-expected ISM services PMI data.
At the start of the week, President Trump looked set to impose 25% trade tariffs on Mexico and Canada, which sent the dollar to a peak of 1/09/88 against its major peers. However, Trump paused the tariffs for 30 days, and the US dollar has since fallen around 2%.
Furthermore, tariffs were applied to China, but the market is relieved that China didn’t hit back overly hard, which suggests that China is willing to tolerate higher US tariffs, at least for the time being.
On the data front, US ISM services dropped to 52.8 in January, down from 54.1 in December, defying expectations of 254.3. The level 50 separates expansion from contraction.
Data this week from the US has painted a mixed picture, with ADP payrolls coming in stronger than expected but jolts jobs opening weakening ahead of Friday’s number farm payroll report.
