- The Japanese Yen (JPY) is steady after recent declines
- Fiscal dove Takaichi dissolved parliament for a snap election
- The US Dollar (USD) falls after recent gains
- Trump threatens tariffs to acquire Greenland
The US dollar Japanese yen (USD/JPY) exchange rate is falling after gains last week. The pair roses 0.15% in the previous week, settling on Friday at 158.12. On Monday at 16:00 UTC, USD/JPY trades -0.06% at 158.02 and traded in a range of 157.43 to 158.02.
The yen is largely unchanged following an announcement by Japanese Prime Minister Sanae Takaichi on Friday to dissolve parliament ahead of a snap general election on February 8.
Takaichi is looking to capitalise on her popularity and shore up her coalition’s fragile majority, paving the way for more aggressive fiscal expansionist policies.
The Bank of Japan’s response will be key, given that PM Takaichi has expressed a preference for cooperation and blurred central bank independence.
The Bank of Japan is due to announce its policy decision on Friday and is widely expected to leave rates unchanged at 0.75% after a rate hike in December
The U.S. dollar is falling across the board. The US dollar index, which measures the USD against a basket of currencies, is falling -0.3% on Monday to 99.09 after three weeks of gains.
The USD is falling after Trump threatened over the weekend implement tariffs on the UK, Norway, and six EU countries as he doubles down on his plans to acquire Greenland.
These developments will make for a fraught start to the World Economic Forum in Davos, where President Trump is due to speak on Wednesday. His outlook on trade, security policy, and growth will be closely watched.
The move has prompted a sell America trade with the US dollar falling against its major peers, whilst U.S. stock futures are also on the decline.
Today is a public holiday in the US, with the treasury and stock markets reopening on Tuesday.
Looking ahead to the week, US GDP, PCE, and PMIs will be in focus.
