- The Japanese yen rose as traders predicted the Bank of Japan would raise interest rates in January.
- Japan's Jibun Bank manufacturing PMI reached 49.6 in December, exceeding the forecast of 49.5 and the previous estimate of 49.0.
- The dollar remains weak, with 2-year and 10-year Treasuries trading at 4.32% and 4.62%, respectively, as U.S. Treasury yields fall.
The Japanese yen (JPY) continued to rise against the US dollar (USD) on Monday. The USD/JPY pair remains weak as the Japanese Yen (JPY) strengthens following the release of last week's Tokyo Consumer Price Index (CPI) inflation statistics and on the back of a possible interest rate hike by the Bank of Japan in January. I am doing it.
Japan's Jibun Bank manufacturing PMI reached 49.6 in December, slightly higher than the preliminary figure of 49.5 and improved from November's 49.0. Although it was the highest level since September, it still represents the sixth consecutive month of decline in factory activity.
The Nikkei Stock Average fell to around 39,950 yen on Monday, halting two days of gains. The decline came as U.S. futures fell slightly on Friday's weakness on Wall Street on rising U.S. Treasury yields and hints that interest rate cuts will be more muted in 2025.
While government bond yields are low and the US dollar is gradually declining, the Japanese yen continues to rise slightly.
- The US Dollar Index (DXY), which measures the value of the US dollar (USD) against six major currencies, is trading around 108.00. The dollar faces challenges as US Treasury yields fall on Monday. At the time of writing, the two-year bond yield is 4.32% and the 10-year bond yield is 4.62%.
- Rising expectations that the US Federal Reserve will reduce interest rate cuts next year could support the dollar. Traders continue to digest the Fed's hawkish policies. The Fed cut its benchmark interest rate by a quarter of a point at its December meeting, and the latest dot plot suggests two cuts next year.
- The headline Tokyo CPI inflation rate was 3.0% year-on-year in December, up from 2.6% in November. On the other hand, the Tokyo CPI, which excludes fresh food and energy, increased by 2.4% compared to the previous year in December (2.2% in the previous month). Tokyo CPI excluding fresh food also rose 2.4% year-on-year in December, slightly lower than the 2.5% expected, but higher than November's 2.2%.
- On Friday, Japan's Finance Minister Katsunobu Kato said he had recently seen unilateral and sharp movements in foreign exchange (FX). Mr. Kato further stated that appropriate measures will be taken against excessive exchange rate fluctuations.
- The Bank of Japan (BOJ) on Friday released a summary of its December monetary policy meeting, highlighting plans to adjust easing measures if economic conditions match expectations. One BOJ board member stressed the importance of monitoring momentum in wage negotiations, while another stressed the need to scrutinize data to decide on changes to financial support.
- The Bank of Japan's October meeting minutes released this Tuesday reiterated the possibility of gradual rate hikes, potentially reaching 1.0% by the end of fiscal 2025, if inflation trends match expectations. Ta. The minutes also emphasized a cautious approach to wage-driven monetary policy. Economic growth amid domestic and global uncertainty, and fiscal measures to counter deflationary pressures.
- Earlier in the month, Bank of Japan Governor Kazuo Ueda said the central bank expects Japan's economy to move closer to sustainably achieving the Bank of Japan's 2% inflation target next year. Ueda also said, “The timing and pace of adjusting the degree of monetary easing will depend on future economic, price, and financial conditions.''
Technical analysis: USD/JPY remains below monthly high near 158.00
The USD/JPY pair was trading around 157.80 on Monday, maintaining bullish momentum within the ascending channel on the daily chart. The 14-day Relative Strength Index (RSI) is hovering just below the 70 level, confirming the bullish trend. However, if the RSI crosses the 70 mark, it indicates an overbought condition and a downward correction may occur.
On the upside, the USD/JPY pair may retest the monthly high of 158.08 hit on December 26th. A decisive break above this level could pave the way for further upside, and USD/JPY could target the upper end of the ascending channel near 160.60.
Immediate support lies at the 9-day exponential moving average (EMA) near 156.79, roughly in line with the lower bound of the ascending channel near 156.50.
USD/JPY: Daily chart
(This article was corrected at 08:00 GMT on 30 December to state that the title was light trading before the new year, not after the new year.)
Today's Japanese yen price
The table below shows the percentage change of the Japanese Yen (JPY) against major listed currencies today. The Japanese yen was the weakest against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | -0.02% | 0.09% | -0.12% | -0.31% | -0.60% | 0.01% | |
| EUR | 0.02% | 0.00% | 0.07% | -0.15% | -0.36% | -0.62% | -0.01% | |
| GBP | 0.02% | -0.01% | 0.08% | -0.15% | -0.37% | -0.63% | -0.02% | |
| JPY | -0.09% | -0.07% | -0.08% | -0.23% | -0.35% | -0.54% | -0.04% | |
| CAD | 0.12% | 0.15% | 0.15% | 0.23% | -0.19% | -0.41% | 0.13% | |
| australian dollar | 0.31% | 0.36% | 0.37% | 0.35% | 0.19% | -0.27% | 0.35% | |
| new zealand dollar | 0.60% | 0.62% | 0.63% | 0.54% | 0.41% | 0.27% | 0.61% | |
| swiss franc | -0.01% | 0.01% | 0.02% | 0.04% | -0.13% | -0.35% | -0.61% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Japanese Yen from the left column and move along the horizontal line to USD, the percentage change displayed in the box represents JPY (base)/USD (estimate).
