Yen Weakens as US Yields Bounce, Markets Eye Trumpâs Reciprocal Tariffs and US CPI
| Action Insight Daily Report 2-12-25 |
Yen Weakens as US Yields Bounce, Markets Eye Trump’s Reciprocal Tariffs and US CPI |
Yen struggled in the Asian session and stayed weak, with renewed selling pressure driven by a combination of rising US Treasury yields and ongoing concerns over trade policy developments. Market participants are still digesting the implications of US President Donald Trump's decision to reintroduce tariffs on steel and aluminum imports, with Canada and the EU voicing strong opposition. Japan has now joined Australia in formally requesting an exemption, but there is little clarity on whether any exceptions will be granted. The focus has now shifted to Trump’s impending announcement of "reciprocal tariffs," which he indicated would be unveiled either yesterday or today. Until the full scope of these measures is known, uncertainty in currency markets is likely to persist. Meanwhile, Fed Chair Jerome Powell’s testimony overnight reinforced expectations that the central bank is in no rush to adjust its policy stance. His remarks confirmed that the current pause in rate cuts could last for an extended period, particularly if inflation remains sticky. Fed funds futures continue to price in roughly 50% probability of a rate cut occurring in June, suggesting that market participants are still divided on the timing of Fed’s next move. The upcoming release of US consumer inflation data will be a critical factor in shaping those expectations. Headline CPI is forecast to remain steady at 2.9%, while core CPI is projected to dip slightly from 3.2% to 3.1%. However, any upside surprise could further push expectations for rate cuts into the second half of the year.... |
USD/JPY Daily Outlook Daily Pivots: (S1) 151.90; (P) 152.25; (R1) 152.86; More... Immediate focus is now on 153.70 support turned resistance as USD/JPY's rebound from 150.92 extends. Firm break of 153.70 will argue that correction from 158.86 has already completed after drawing support from 38.2% retracement of 139.57 to 158.86 at 151.49. Such development will also keep the rally from 139.57 intact. Further rise should then be seen to retest 158.86 next. ON the downside, however, sustained trading below 151.49 will suggest that whole rise from 139.57 has completed, and bring deeper fall to 61.8% retracement at 146.32 next. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
|---|
| 23:50 | JPY | Money Supply M2+CD Y/Y Jan | 1.30% | 1.30% | 1.30% | | 06:00 | JPY | Machine Tool Orders Y/Y Jan P | 11.20% | | 13:30 | USD | CPI M/M Jan | 0.30% | 0.40% | | 13:30 | USD | CPI Y/Y Jan | 2.90% | 2.90% | | 13:30 | USD | CPI Core M/M Jan | 0.30% | 0.20% | | 13:30 | USD | CPI Core Y/Y Jan | 3.10% | 3.20% | | 15:30 | USD | Crude Oil Inventories | 2.4M | 8.7M |
|
|
|
