USD/JPY: Dollar buying and yen selling set to continue
Week in review
The USD/JPY opened the week at 152.83. The yen was sold after 4Q real GDP came in below market expectations on the morning of 16 February, with the USD/JPY rising to around 153.50 following press conferences by Prime Minister Sanae Takaichi and BOJ Governor Kazuo Ueda. The USD/JPY briefly pulled back to above 152.50 on 17 February, but regained strength as oil prices firmed on heightened tensions surrounding Iran. US data surprised to the upside during US trading on 18 February, including January industrial production. The January FOMC minutes also referenced discussion of potential rate hikes, reinforcing broad-based dollar strength. The USD/JPY extended gains to 155.34 in Tokyo trading on 19 February, marking a high for the week. The pair subsequently consolidated around 155, and as of the time of writing on 20 February was trading below 150.50, probing for a fresh weekly high (Figure 1). The dollar strengthened across-the-board among G10 currencies this week. The yen underperformed, while the Australian dollar remained relatively firm (Figure 2).
FIGURE 1: USD/JPY
Note: As at 13:00 JST on 20 February
Source: EBS, Refinitiv, MUFG
FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK
Note: As at 13:00 JST on 20 February
Source: Bloomberg, MUFG