The Japanese Yen (JPY) sticks to its negative bias against a mildly positive US Dollar (USD), allowing the USD/JPY pair to gain some positive traction for the second straight day on Tuesday and hold steady above the 148.00 mark through the Asian session.
Concerns that Trump could impose fresh tariffs on Japan, along with a generally positive tone around the equity markets, turn out to be key factors undermining the safe-haven JPY.
Data released earlier today showed that Japan's annual wholesale inflation – Producer Price Index (PPI) – rose 4.0% in February, underscoring broadening inflationary pressure.
Adding to this hopes that bumper wage hikes seen last year will continue this year remain supportive of the growing market acceptance that the Bank of Japan (BoJ) will hike interest rates further. This might hold back the JPY bears from placing aggressive bets.
Moreover, the recent sharp narrowing of the rate differential between Japan and other countries should contribute to limiting losses for the lower-yielding JPY.
The USD, on the other hand, might struggle to lure buyers amid expectations that the Federal Reserve (Fed) will cut rates several times this year amid worries about a tariff-driven US economic slowdown. This, in turn, should cap the USD/JPY pair ahead of the US consumer inflation figures.
Source: FXStreet
