- The Japanese Yen (JPY) is steady after recent declines
- JGB yields steady after sharp gains yesterday on fiscal spending worries
- The US Dollar (USD) pares earlier losses
- Trump strikes a more conciliatory tone in Davos
The US dollar Japanese yen (USD/JPY) exchange rate is broadly unchanged for a third day. The pair rose 0.03% in the previous session, settling on Tuesday at 158.16. On Wednesday at 16:00 UTC, USD/JPY trades 0.04% at 158.24 and traded in a range of 157.75to 158.31.
The yen is struggling to gain ground, hovering around 18-month lows, as investors continue to weigh the Takaichi fallout and look ahead to the BoJ rate decision on Friday.
The Japanese bond yield had surged at the start of the week after the Japanese Prime Minister dissolved parliament and called for a snap election. She plans to capitalise on her increasing popularity to secure a larger majority, enabling her to push through more aggressive fiscal expansionary policies.
Bond yields have calmed today; however, the bigger picture remains concerning.
Attention is also turning to the BoJ rate decision on Friday, where the central bank is set to leave the rate unchanged after hiking rates in December.
The U.S. dollar is broadly flat across the board. The US dollar index, which measures the USD against a basket of currencies, is falling -0.03% on Wednesday to 98.59 after steep losses last week.
Have studied after yesterday’s losses as investors digest president trump speech at Davos. This was Trump’s first speech after the World Economic Forum since 2020 and came amid escalating tensions with the EU over his plans to acquire Greenland.
Investors sold out of Treasuries, the US dollar and U.S. stocks on Tuesday after Trump revived trade tariff threats, announcing a 10% tariff on goods from eight European countries from February 1st.
However, Trump struck a less aggressive tone in his speech at Davos saying that he would not use force to get Greenland. He added that he wanted negotiations to start immediately.
The market is benefiting from a relief rally, with U.S. stocks rebounding and the sell-off in the US dollar steadying.
