The Japanese yen continues to take investors and traders on a roller-coaster ride. After climbing 1.2% on Wednesday, USD/JPY gave almost all of those gains on Thursday, declining 1.05%. The yen has taken a breather today and is trading at 152.63 in the European session, down 0.19% on the day.
Japan’s PPI keeps accelerating
Producer prices in Japan climbed 4.2% y/y in January, up from an upwardly revised 3.9% in December and above the market estimate of 4.0%. PPI accelerated for a fifth consecutive month and posted its highest level since May 2023. The gain was driven by higher food prices. Monthly, PPI eased to 0.3%, down from 0.4% in December and in line with the market estimate.
The hotter-than-expected PPI report reflects persistent inflationary pressures and follows the core CPI reading for December, which hit 3%, its highest annual level in 16 months. With inflation moving higher, expectations are growing that the Bank of Japan will raise interest rates further in the near term.
The Bank has signaled that it will raise rates if wage growth increases and keeps inflation sustainable at the BoJ’s 2% target. In anticipation of higher interest rates, Japan’s 10-year bond yields have been rising and are close to a 15-year high.
In the US, the PPI release showed little change in January. PPI rose 0.4% m/m, after an upwardly revised 0.5% gain in December. This was higher than the market estimate of 0.3%. Annually, PPI rose 3.5%, after an upwardly revised 3.5% gain in December.
The US wraps up the week with the January retail sales report. The markets are bracing for a contraction, with a market estimate of -0.1%, after the 0.4% gain in December. Annually, retail sales are expected to dip to 3.7%, after a 3.9% gain in December.
USD/JPY technical
USD/JPY is testing support at 152.73. Below, there is support at 152.29.
153.00 and 153.44 are the next resistance lines.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD stays defensive below 1.0500 amid light trading
EUR/USD struggles to capitalize on recent upside and oscillates in a narrow range below 1.0500 in European trading on Monday. However, the pair's downside remains cushioned by persistent US Dollar weakness and an upbeat mood. Focus shifts to central bank talks.
GBP/USD ranges near 1.2600 as US Dollar steadies
GBP/USD keeps its range near 1.2600 in the early European session on Monday. The pair stays support amid a subdued US Dollar price action following Friday's disappoining US Retail Sales data. Thin trading is likely to extend as US markets are closed in observance of Presidents' Day.
Gold: Bulls have the upper hand near $2,900 amid trade war fears and weaker USD
Gold regained positive traction on Monday amid sustained USD weakness. Concerns about Trump’s tariffs further benefit the safe-haven XAU/USD pair. The fundamental and technical setup underpin prospects for additional gains.
Five fundamentals for the week: Peace talks, Fed minutes and German election stand out Premium
US President Donald Trump remains prominent, especially in a week when high-level peace talks kick off. Nevertheless, the Commander-in-Chief competes with the world's most powerful central bank, and other events are of interest as well.
Tariffs likely to impart a modest stagflationary hit to the economy this year
The economic policies of the Trump administration are starting to take shape. President Trump has already announced the imposition of tariffs on some of America's trading partners, and we assume there will be more levies, which will be matched by foreign retaliation, in the coming quarters.
The Best Brokers of the Year
SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.