Yen Strengthens as Market Reacts to Japanese Data – Focus Shifts to ISM Non-Manufacturing Index

Yen Strengthens as Market Reacts to Japanese Data – Focus Shifts to ISM Non-Manufacturing Index

■ Today’s Market Movements

📌 Yen Strengthens on Unexpected Japanese Economic Data

• Japan’s Monthly Labor Statistics Report showed cash earnings rising by 4.8% YoY, exceeding expectations and confirming accelerated wage growth.
• Minister Akazawa’s comment, “We are currently in an inflationary state,” fueled expectations of a BOJ rate hike, triggering yen buying.
• USD/JPY dropped from the mid-154 range to just below 153, with cross-yen pairs also shifting toward yen appreciation.

📌 U.S. Market Focus: ISM Non-Manufacturing Index (Released at 24:00 JST)

• Yesterday’s JOLTS job openings decline strengthened expectations for a rate cut.
• Today’s ADP private payrolls (forecast: +150K) and ISM Non-Manufacturing PMI (forecast: 52.0) will determine the market trend.
• If results exceed expectations → USD strengthens, JPY weakens.
• If weaker than expected → USD selling and further yen appreciation likely to continue.

📌 Market Still Watching Trump Administration & U.S.-China Tariff Issues

• Markets are becoming more resilient to tariff risks, leading to a more muted reaction.
• However, a U.S.-China meeting could still spark major volatility depending on timing → Continued caution on Trump’s statements is necessary.

■ Trading Strategy

✅ Focus on Counter-Trend Trading & Reacting to ISM Data

• U.S.-China tariff risks are limited → If a sudden sell-off occurs, counter-trend buying is an effective strategy.
• USD/JPY could either break below 152 or return to the high-154 range, depending on ISM results.

✅ Buy on Dips in a Yen-Strengthening Market, Confirm Post-ISM Trend

✅ Maintain a Bullish Bias on U.S. Stocks, Gold, and Bitcoin

• U.S. Stocks (S&P500, NASDAQ): Tariff risks are easing → Look for dip-buying opportunities.
• Gold (XAU/USD): Safe-haven demand remains strong, with potential for a move above $2,900.
• Bitcoin (BTC/USD): Expectations for a move above $100K are rising → Buying dips remains effective.

■ Key Upcoming Events

📌 February 7 (Wednesday)

• BOE (Bank of England) Interest Rate Decision (Impact on GBP)

📌 February 8 (Thursday)

• U.S. January Nonfarm Payrolls (Critical indicator of labor market strength)

■ Summary

✅ Is the yen’s strength temporary? → The ISM index results could trigger a USD rebound.
✅ Tariff risks remain limited, making counter-trend dip buying a viable strategy.
✅ Stay cautious about Trump’s statements and the timing of U.S.-China meetings.
✅ The U.S. jobs report is the biggest event this week, likely setting the dollar’s direction heading into the weekend.

For today, **watch market reactions after the ISM Non-Manufacturing Index release and adapt short-term trades accordingly.**🔥💹