📉 Risk Aversion Accelerates as Trump’s Tariff Remarks Drive Yen Strength
This week’s market has been shaken by President Trump’s tariff announcement. In a press conference at 5 AM JST, Trump declared a 25% additional tariff on Canada and Mexico, and a 20% tariff on China. Furthermore, he accused Japan and China of currency devaluation and hinted at the possibility of imposing tariffs on Japan as well.
U.S. and Japanese stock markets plummeted, though there was no cascading sell-off akin to a flash crash. Some buybacks were observed, particularly in Shanghai and Hong Kong markets, where investors looked forward to the National People’s Congress (NPC) scheduled for the next day, leading to a more resilient performance.
Regarding USD/JPY, Trump’s criticism of the weak yen could push the pair further downward. Additionally, Japan’s long-term interest rates, inflation indicators, and wage trends are already fostering expectations of a BOJ rate hike, further strengthening the yen. Comments from BOJ Governor Ueda and Ministry of Finance officials could also have a significant impact on market sentiment, requiring close monitoring.
🔍 Key Market Focus for Today
Although today’s scheduled economic indicators are relatively minor, upcoming U.S. employment data will be crucial in shaping market direction.
- France Fiscal Balance (January)
- South Africa GDP (Q4)
- Eurozone Employment Data (January)
Markets are already shifting their focus toward major U.S. data later this week:
- ADP Employment Report (Tomorrow)
- ISM Non-Manufacturing PMI (Tomorrow)
- Initial Jobless Claims (Thursday)
- U.S. Non-Farm Payrolls (Friday)
The U.S. jobs report is a key event that could influence the Fed’s monetary policy and significantly impact USD volatility.
📢 Upcoming Key Events
- Speech by NY Fed President Williams (Bloomberg Event)
- Trump’s speech tomorrow morning (Possible additional remarks on tariffs)
- China’s National People’s Congress (NPC) (Could impact the yuan and Chinese stocks)
đź’ˇ Trading Strategy
The market remains volatile following Trump’s remarks, making it difficult to establish a clear trend.
Trump’s recent comments on cryptocurrencies initially seemed like a bullish signal for Bitcoin, but instead, prices dropped sharply. Short-term volatility has increased, making trades more challenging.
On the other hand, yen appreciation continues, presenting further opportunities for JPY buying trades.
- Close attention is needed to USD/JPY’s movement around the 150 level—a break below this level could accelerate further selling.
- The direction of the U.S. dollar will likely become clearer after the U.S. jobs report later this week.
With few major market-moving events tonight, the best approach is to remain cautious, waiting for clearer signals from upcoming U.S. economic data and Trump’s next speech.
