USD/JPY Rises, US Data Lifts Dollar
USD/JPY traded slightly in the Asian session on Friday, holding around 158.65. This strengthening occurred as the US dollar received a boost from stronger-than-expected employment data, while the yen was pressured by domestic Japanese political issues.
The US Department of Labor report showed that initial claims for unemployment benefits unexpectedly fell to 198,000 for the week ending January 10. This figure was lower than market expectations of 215,000 and also down from the previous week's 207,000. The data reinforced the view that the US economy remains quite solid, increasing market confidence that the Fed can hold interest rates for longer.
Along with this data, the Fed Funds market also shifted expectations for the next interest rate cut to around June, as Fed officials still see inflation as "sticky." Market participants' focus today also focused on the release of US Industrial Production and a speech by Fed Chair Michelle Bowman, which could provide additional clues about the direction of monetary policy.
In Japan, the yen weakened on concerns that Prime Minister Sanae Takaichi will have more room to pursue expansionary fiscal policy. Takaichi also plans to dissolve parliament next week and hold snap elections to strengthen his political mandate—a scenario that could raise market concerns about the budget and increase pressure on the Japanese yen.
However, the yen's weakening could potentially be restrained by intervention. Japanese authorities have again issued a warning against excessive exchange rate movements, asserting their readiness to take "appropriate" measures without closing any options. Under these conditions, USD/JPY remains volatile, sensitive to US data, comments from Fed officials, and policy signals from Tokyo. (asd)
Source: Newsmaker.id
