The USD/JPY pair held steady during the Asian trading session on Friday, hovering around 152.60, after registering losses in the previous session. The currency pair faced pressure following US President Donald Trump’s decision to delay the implementation of reciprocal tariffs, coupled with a weakening US Dollar amid declining yields across the US Treasury curve. Despite ongoing global trade tensions, market participants are now focused on the upcoming release of US Retail Sales data later in the day.
The US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, extended its losses for the fourth consecutive session, trading near 107.00. At the time of writing, US Treasury yields stood at 4.31% for the 2-year note and 4.53% for the 10-year bond.
In economic news, US Core Producer Price Index (PPI) inflation rose to 3.6% year-on-year in January, surpassing expectations of 3.3%, though slightly below the revised 3.7% (previously reported as 3.5%). This has strengthened expectations that the Federal Reserve will hold off on rate cuts until the latter half of the year. Persistent inflationary pressures may also support the Fed’s stance of keeping rates in the 4.25%-4.50% range for an extended period.
Meanwhile, Japan’s Economy Minister, Ryosei Akazawa, remarked on Friday that Japan would respond appropriately to the US’s tariff measures. He also noted the varied effects of the weak Japanese Yen (JPY) on Japan’s real economy.
The JPY found some support following stronger-than-expected Producer Price Index (PPI) data from Japan on Thursday, which boosted expectations for further rate hikes by the Bank of Japan (BoJ). The data, coupled with robust wage growth, suggests growing inflationary pressures in Japan, reinforcing the likelihood of additional monetary tightening by the BoJ.
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