Yen Holds Gains as BOJ Outlook Mulkled

The Japanese yen steadied around 155.8 per dollar on Tuesday after coming under pressure overnight following a magnitude-7.5 earthquake on Japan’s northeast coast, which briefly raised concerns about economic disruptions.

A downward revision to Japan’s Q3 GDP also weighed on the currency, supporting Prime Minister Sanae Takaichi’s large spending plans and complicating the Bank of Japan’s policy decision next week.

The central bank is expected to raise interest rates this month amid a gradual path to policy normalization.

Investors now await remarks from Bank of Japan Governor Kazuo Ueda at a London event later today for signals on the policy path.

Meanwhile, traders are preparing for a likely 25 basis point rate cut from the US Federal Reserve this week, though bets on further Fed easing in 2026 have eased.

EUR/USD

• 1.1800 (EUR 1.99 bn)
• 1.1650 (EUR 976.48 mn)
• 1.1575 (EUR 892.51 mn)

USD/JPY

• 156.00 (US$ 1.67 bn)
• 155.00 (US$ 1.73 bn)
• 153.00 (US$ 778.82 mn)

GBP/USD

• 1.3500 (GBP 500.00 mn)
• 1.3050 (GBP 740.00 mn)

USD/CHF

• 0.8020 (US$ 180.00 mn)
• 0.7975 (US$ 100.00 mn)

USD/CAD

• 1.3940 (US$ 1.12 bn)

AUD/USD

• 0.6665 (AUD 301.57 mn)
• 0.6595 (AUD 400.22 mn)
• 0.6475 (AUD 864.67 mn)

NZD/USD

• 0.5730 (NZD 926.14 mn)

EUR/GBP

• 0.8845 (EUR 200.11 mn)
• 0.8590 (EUR 175.00 mn)

Justin prepared a weekly overview before leaving for the holidays here. For more information on how to use this data, you may refer to this post here. This article was written by Giuseppe Dellamotta at investinglive.com.

The Japanese yen appreciated past 155 per dollar on Monday, reaching three-week highs amid growing speculation that the Bank of Japan could raise interest rates next week following hawkish signals from policymakers.

Traders are also betting that Prime Minister Sanae Takaichi’s government would support a stronger yen, which has been pressured partly by delayed rate hikes, to counteract the impact of higher import costs on inflation.

Meanwhile, data showed real wages fell for the tenth consecutive month in October, and Q3 economic growth contracted more sharply than initially reported, adding complexity to the rates outlook.

Externally, the yen gained further support from broad dollar weakness amid expectations that the US Federal Reserve will deliver a quarter-point rate cut this week.

There is arguably just one to take note of on the day, as highlighted in bold below.

That being for USD/JPY at the 155.00 mark. Sellers tried to make a play once again yesterday in trying for a firm break below the figure level but ultimately failed as the daily close held at 155.05. So, they're going to have to take another shot at that today. The expiries above will help to keep a rough lid on price action at least in terms of limiting upside potential, that as the dollar remains softish and the yen continues to work with more hawkish expectations ahead of the BOJ meeting later this month.

The technical side of things is what is going to be key in closing out the week though. So, watch out for that daily/weekly close under 155.00 to put more pressure on the pair next week if we do get there.

I'll be away until 16 December, so Giuseppe will take over to keep you guys posted on the expiries in the week ahead at least. I'll see if I can sneak in a preview for the expiries board for next week before I go. But again, just remember that the levels will be subject to change as they can and will evolve based on the flows up until the expiry date/time itself.

For more information on how to use this data, you may refer to this post here.

Head on over to investingLive (formerly ForexLive) to get in on the know! This article was written by Justin Low at investinglive.com.

The Japanese yen firmed around 155 per dollar on Friday and was on track for a second consecutive weekly advance, supported by speculation that the Bank of Japan will raise interest rates later this month.

Key members of Prime Minister Sanae Takaichi’s government reportedly would not oppose the central bank if it decides to hike rates in December, although some senior officials remain cautious about the timing.

Markets are pricing in a move this month, with 1–2 more rate increases seen next year.

Expectations were reinforced after BOJ Governor Kazuo Ueda expressed confidence in Japan’s economic outlook and said the central bank would carefully weigh the pros and cons of a rate hike and act appropriately.

Finance Minister Satsuki Katayama also said this week that she expects the central bank to conduct policy in a way that achieves its 2% inflation target using its own specific methods.

It's a relatively quiet start to the session with not much for traders and investors to work with. The overall risk mood remains more muted, even if European indices are posting modest gains to follow up the steady showing from yesterday. US futures are flat, so that's not providing much direction on risk appetite.

As such, major currencies are mostly caught in a bind with the dollar at least keeping steadier after a softer showing to start December. The only notable mover on the day is USD/JPY, which is just down 0.2% but starting to trickle below the 155.00 mark as mentioned earlier here.

Besides that, there is not much appetite across other major currencies with EUR/USD locked in by large option expiries while other major currencies are keeping only within 15 pips change of the dollar currently.

At the balance, the dollar is still keeping more vulnerable on the week but the slow bleeding has at least stopped for now.

The key risk events later in the day will be from US data with the Challenger job cuts and weekly initial jobless claims on the agenda. As a reminder, there will be no non-farm payrolls report this week. This article was written by Justin Low at investinglive.com.