Yesterday, during Tokyo trading hours, Japan’s December wage data showed a 0.6% increase in real wages. Also, Economy Minister Akazawa said he agrees with the Bank of Japan Governor on the current inflation situation. Because of this, expectations for an interest rate increase in Japan grew, and the Japanese yen became stronger. As a result, the USD/JPY exchange rate fell to the lower 153 yen level.
In the New York market, the U.S. ADP employment report was better than expected, which caused some buying of the U.S. dollar. However, later, the U.S. ISM non-manufacturing index was weaker than expected, leading to lower U.S. long-term interest rates.
As the market understands more about how the Trump administration is using tariffs in trade deals, concerns about high inflation are decreasing. When U.S. interest rates fell, USD/JPY dropped below the 200-day moving average (152.80 yen) and reached 152.12 yen, the lowest level since December 12.
Before the U.S. jobs report tomorrow, some market adjustments may happen. However, since inflation concerns are easing and USD/JPY is below the 200-day moving average, the exchange rate may continue to move lower.
USD/JPY Expected Range: 153.20 – 151.50 yen
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