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πŸ—žοΈ Tokyo Sees Dollar Strength and Yen Weakness β€” The Question Is Whether It Holds Overseas

πŸ—žοΈ Tokyo Sees Dollar Strength and Yen Weakness β€” The Question Is Whether It Holds Overseas

🎯 Today’s Focus

Tokyo trading favored a stronger dollar and weaker yen.
The key test now is whether that momentum can be sustained during London and New York hours.

Risk-on sentiment and a sharp drop in the New Zealand dollar pushed USD higher in Asia.
However, with UK CPI, U.S. data, and the FOMC minutes ahead, the durability of this move remains uncertain.

πŸ‡―πŸ‡΅ Tokyo Session: Drivers Behind Dollar Strength & Yen Weakness

β‘  NZD Slump Boosts the Dollar

The Reserve Bank of New Zealand kept rates unchanged, but its statement and governor’s remarks leaned dovish.

πŸ‘‰ NZD fell sharply
πŸ‘‰ Broad USD buying followed

β‘‘ Additional Yen-Weak Factors

  • January Japan trade data showed exports growing at the fastest pace in three years.

  • Economy Minister Akazawa outlined a large-scale U.S. investment project.
    β†’ Increased U.S. investment fuels expectations of dollar buying and yen selling.

  • Japanese equities remained firm β†’ risk-on yen selling.

As a result, USD/JPY, EUR/JPY, and GBP/JPY all strengthened.

πŸ‡¬πŸ‡§ UK CPI: Core and Services Surprise to the Upside

Indicator Actual Forecast Previous
Headline CPI +3.0% +3.0% +3.4%
Core CPI +3.1% +3.0% +3.2%
Services CPI +4.4% +4.3% +4.5%

πŸ‘‰ Core and services CPI exceeded expectations, triggering brief pound buying.

  • GBP/USD rose to 1.3578

  • GBP/JPY approached 208.50

However, the reaction faded quickly.

πŸ’΄ Early London FX Moves

  • USD/JPY climbed to 153.73

  • GBP/JPY hovered near 208.50

  • AUD/JPY rose to 108.74

European equities and U.S. futures were firm.

πŸ‘‰ Risk-on tone continues to favor yen weakness.

πŸ‡ΊπŸ‡Έ Tonight’s Key U.S. Drivers

U.S. Economic Data

  • MBA Mortgage Applications

  • Housing Starts

  • Durable Goods Orders (forecast: -2.0%)

  • Industrial Production

  • U.S. Treasury International Capital (TIC) data (important)

πŸ”Ž Particular focus on TIC flows.
Reports suggest Chinese authorities may be discouraging banks from holding long-term U.S. Treasuries.

β†’ If U.S. securities investment declines, it could weigh on the dollar.

FOMC Minutes

Minutes from the January meeting.
A dovish tone could cap further dollar gains.

🌍 Geopolitical Risk

Developments in U.S.–Iran negotiations could influence oil, risk assets, and the dollar.

πŸ“Š Current Market Snapshot

  • Tokyo: Dollar strength, yen weakness

  • UK CPI: Temporary pound buying

  • London: Risk-on continues to pressure the yen

  • Market awaiting U.S. catalysts

πŸ”Ž Conclusion

βœ” Yen weakness remains intact for now
βœ” U.S. Treasury flow data could shape dollar direction
βœ” FOMC minutes may trigger dollar consolidation
βœ” Geopolitical risks remain a wildcard

We are entering a phase where the market must confirm whether Tokyo’s dollar strength and yen weakness are sustainable globally.

A true breakout likely requires a clear U.S. catalyst.
Until then, expect volatile, range-driven price action.

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