- The Japanese Yen (JPY) is rising after earlier losses
- BoJ left rates unchanged at 0.75%
- The US Dollar (USD) slumped 1.6% this week
- Concerns over Trump’s policy hit demand for the USD
The US dollar Japanese yen (USD/JPY) exchange rate is falling after three days of losses. The pair rose 0.09% in the previous session, settling on Thursday at 158.41. On Friday at 21:00 UTC, USD/JPY trades -1.6% at 155.80 and traded in a range of 155.69 to 159.23. The pair is set to fall 1.5% across the week.
The yen surged late on Friday after initially weakening following the Bank of Japan rate decision. The central bank, as expected, left rates unchanged at 0.75% his highest level since 1995.
Despite the hawkish undercurrent at the meeting, the yen weakened over the weekend amid ongoing concerns about Japan’s fiscal picture, as PM Takaichi dissolved parliament and called a snap election for February 8. This, the market fears, could give her a stronger mandate to ramp up fiscal spending. Japanese bond yields have surged.
The yen rebounded lower towards the end of the session, though this was driven by USD weakness.
The U.S. dollar is falling across the board. The US dollar index, which measures the USD against a basket of currencies, is falling -0.86% on Friday to 97.52, marking a second day of losses. The USD trades 1.9% lower across the week.
The U.S. dollar is on track for its worst weekly performance since May, killing games in the UN and other global currencies after a week of unpredictable policymaking from the trump administration that rattled financial markets.
Investors, I’ve been glued to President Trump this week, who first announced tariffs on European overheads bid for Greenland before dropping the threats and striking the deal with NATO at the World Economic Forum in Davos.
The fact that the US dollar is sliding even as treasury yields hold steady suggests political risks are a bigger factor than monetary policy.
Looking ahead, attention will turn to the Federal Reserve’s rate decision on Wednesday, when the central bank is expected to leave rates unchanged.
