Japanese Yen bulls retain control amid rising bets for additional BoJ rate hikes
The Japanese Yen attracts strong follow-through buying in reaction to the upbeat Q4 GDP.
Optimism over the delay of Trump's reciprocal tariffs provides an additional boost to the JPY.
The USD languishes near a two-month low and further contributes to the USD/JPY pair's slide.
Japanese Yen bulls retain control amid rising bets for additional BoJ rate hikes
The Japanese Yen attracts strong follow-through buying in reaction to the upbeat Q4 GDP.
Optimism over the delay of Trump's reciprocal tariffs provides an additional boost to the JPY.
The USD languishes near a two-month low and further contributes to the USD/JPY pair's slide.
The Japanese Yen (JPY) builds on its steady intraday ascent led to strong domestic Gross Domestic Product (GDP) print, which reaffirmed market bets that the Bank of Japan (BoJ) will hike interest rates further. This, along with the prevalent US Dollar (USD) selling bias, drags the USD/JPY pair to a one-week low, around mid-151.00s during the Asian session on Monday.
Meanwhile, the optimism over a delay in US President Donald Trump's reciprocal tariffs and the narrowing of the US-Japan rate differential turn out to be other factors underpinning demand for the lower-yielding JPY. Investors, however, remain worried about the economic fallout from Trump's trade policies, which might hold back the JPY bulls from placing fresh bets.
Japanese Yen continues to be underpinned by Japan's stong Q4 GDP print
Data released earlier this Monday showed that Japan's economy expanded by 0.7% in the October-December quarter compared to the previous quarter's upwardly revised reading of 0.4%.
The yearly growth rate accelerated from a revised 1.7% in the third quarter to 2.8%, which supports the Bank of Japan's plan to keep hiking rates amid signs of broadening inflation in Japan.
Japan's Economy Minister Ryosei Akazawa said that he expects the economy to continue making a modest recovery, though he noted the need to be mindful of overseas economic downside risks.
Tokyo-based Kyodo News reported on Sunday that Japan had asked to be exempted from US President Donald Trump's 25% tariffs on steel and aluminum, and the so-called reciprocal tariffs.
This follows Trump's order on Thursday to formulate plans for reciprocal tariffs on every country that imposes taxes on US imports, though he stopped short of announcing immediate levies.
This, along with the dismal US Retail Sales figures released on Friday, keeps the US Dollar depressed near its lowest level since December 17 and weighs on the USD/JPY pair.
The US Census Bureau reported that Retail Sales declined by 0.9% in January, worse than the decrease of 0.1% expected and the 0.7% increase (revised from 0.4%) in December.
US Secretary of State Marco Rubio signaled on Sunday that talks with Russia this week were a chance to see how serious Russian President Vladimir Putin is about peace.
Adding to this, Trump said that he was working hard to achieve peace and that he believed he could meet Putin very soon to discuss ending the protracted war in Ukraine.
Source: Fxstreet
