Yen Strengthens as BOJ Rate Hike Speculation Grows – Caution on U.S. Employment Data & Trump’s Comments

Yen Strengthens as BOJ Rate Hike Speculation Grows – Caution on U.S. Employment Data & Trump’s Comments

■ Today’s Market Developments

📌 Hawkish BOJ Signals Drive Rapid Yen Appreciation

• Japan’s Monthly Labor Statistics showed cash earnings rising by +4.8% YoY, exceeding expectations.
• Minister Akazawa stated that “inflation is present,” aligning with BOJ Governor Ueda’s view.
• BOJ board member Tamura suggested a possible 1% rate hike within the year, accelerating yen buying.
• USD/JPY plunged from just below 156 at the start of the week to 151.80, with cross-yen pairs also declining sharply.

📌 U.S.-China Trade War & Trump’s Comments on Japan Under Scrutiny

• The U.S. has set a grace period for tariff agreements with Canada and Mexico, calming markets.
• However, new tariffs on China have been implemented, raising concerns of retaliatory tariffs.
• If Trump hints at increasing tariffs on Japan, yen appreciation could accelerate further.

📌 Focus on Whether Foreign Investors Continue Buying Yen

• USD/JPY’s 200-day moving average (152.80) is a key resistance level to watch.
• Further yen buying may occur in overseas markets.

📌 BOE Policy Announcement & U.S. Employment Data in Focus

• The market has priced in a BOE rate cut, but more votes for a hold could impact expectations.
• GBP movements may affect the broader EUR/GBP market.
• Key U.S. economic indicators (jobless claims, nonfarm productivity) could serve as leading indicators for Friday’s NFP report.

■ Trading Strategy

✅ Yen Strength Continues – Targeting EUR/JPY Shorts

• If Trump comments on Japan, yen strength could accelerate.
• The ECB’s dovish stance weighs on the euro → EUR selling + JPY buying makes EUR/JPY shorts attractive.
• Looking to short on a rebound around 152.50.

✅ BOE Policy Decision Could Trigger Large GBP Moves

• If the MPC vote is “8-1,” it aligns with market expectations → GBP remains range-bound.
• If the vote shifts to “7-2” or “6-3,” rate cut expectations may fade, leading to GBP buying.
• GBP/USD sell zone: 1.2650-1.2700.

✅ U.S. Data May Influence Dollar Strength

• Stronger-than-expected jobless claims could lead to dollar buying.
• If ISM Non-Manufacturing PMI (24:00 JST) beats expectations, USD could rebound.
• However, strong yen demand may limit USD/JPY’s upside.

✅ Expecting Yen Strength & Euro Weakness – Trade Setup

■ Key Upcoming Events

📌 February 8 (Thursday)

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

📌 February 9 (Friday)

• U.S. January Nonfarm Payrolls (Key Indicator for U.S. Monetary Policy)

■ Summary

✅ Yen strength continues, making EUR/JPY shorts a high-probability trade.
✅ BOE decision could lead to sharp GBP moves, with GBP/JPY in focus.
✅ Trump’s comments on Japan could further accelerate yen buying.
✅ U.S. jobs data will shape dollar trends leading into the weekend.

Today’s strategy: **Monitor BOE decision & ISM data, and trade short-term opportunities accordingly.**🔥💹