Japanese Yen slides after hawkish BoJ comments

Kenny Fisher MarketPulse

The Japanese yen is sharply lower on Tuesday and has fallen to a two-week low. In the European session, USD/JPY is trading at 148.62, up 1.0% on the day.

BoJ Deputy Governor says rate hike coming

Bank of Japan Deputy Governor Ryozo Himino said on Tuesday that the central bank would raise rates if conditions were appropriate. Himino said there were "upside and downside risks for economy and inflation", citing the tight labor market and global economic uncertainty as upside inflation risks and tariffs and commodity prices as downward price risks.

Himino said that the impact of US tariffs could be "smaller or larger than expected" and the BoJ woul have to carefully assess the situation. The remarks reflect a genuine uncertainty over the tariffs, as US President Trump has been erratic is his trade policy. Japan and the US have reached a deal in which most Japanese products will be tariffed at 15%, but some sticking points remain, such as Japan's import of US rice.

Himino didn't provide any clues as to the timing of a rate hike but the markets are anticipating a hike in October or December. US Treasury Secretary Scott Bensen called out the BoJ in August, saying it had fallen behind the curve in the fight against inflation and needed to raise rates. Those hawish remarks raised expectations of a rate hike.

The deputy governor added that underlying inflation is still below the 2% target but it is rising and will hit the target. This is another hawkish signal from the BoJ that it plans to move towards normalization and a rate hike is only a question of timing.

ISM Manufacturing PMI expected to contract

The US will release ISM Manufacturing PMI later today. Manufacturing has been in the doldrums, with five straight readings below 50, which indicates contraction. The market estimate for August stands at 49.0, which would be an improvement from the July reading of 48.0, the weakest level since October 2024. The weak global economy and the impact of counter-tariffs on US goods continues to dampen manufacturing activity.

USD/JPY technical

USD/JPY has pushed above resistance at 147.22 and is putting pressure on 147.83. The next resistance line is 148.31.
146.74 is providing support.

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

EUR/USD holds firm above 1.1900 as US NFP looms

EUR/USD holds its upbeat momentum above 1.1900 in the European trading hours on Wednesday, helped by a broadly weaker US Dollar. Markets could turn cautious later in the day as the delayed US employment report for January will takes center stage.

GBP/USD recovers losses despite rising UK political risks, BoE rate cut bets

Pound Sterling advances against the US Dollar after registering modest losses in the previous session, trading around 1.3650 during the Asian hours on Wednesday. The pair could extend losses as the Pound Sterling faces pressure from rising political risks in the UK and growing expectations of near-term Bank of England rate cuts.

Gold sticks to gains near $5,050 as focus shifts to US NFP

Gold holds moderate gains near the $5,050 level in the European session on Wednesday, reversing a part of the previous day's modest losses amid dovish US Federal Reserve-inspired US Dollar weakness. This, in turn, is seen as a key factor acting as a tailwind for the non-yielding yellow metal ahead of the critical US NFP release.

US Nonfarm Payrolls expected to show modest job gains in January

The United States Bureau of Labor Statistics will release the delayed Nonfarm Payrolls data for January on Wednesday at 13:30 GMT. Investors expect NFP to rise by 70K following the 50K increase recorded in December.

S&P 500 at 7,000 is a valuation test, not a liquidity problem

The rebound from last week’s drawdown never quite shook the sense that it was being supported by borrowed conviction. The S&P 500 once again tested near the 7,000 level (6,986 as the high watermark) and failed, despite a macro backdrop that would normally be interpreted as supportive of risk.

BNB prolonged correction signals deeper bearish momentum

BNB (BNB), formerly known as Binance Coin, is trading below $618 on Wednesday, marking the sixth consecutive day of correction since the weekend. The bearish price action is further supported by rising short bets alongside negative funding rates in the derivatives market.