Yen Weakens Amid Prospects of Narrower U.S. Tariffs — Market Talk

The yen weakens slightly against most other G-10 and Asian currencies ahead of the Bank of Japan's monetary-policy decision due later today. The central bank is widely expected to leave rates unchanged. "The BOJ will likely want to assess the impacts of the January rate hike and U.S. tariff policies," CBA's Kristina Clifton says in a research report. "We expect the BOJ to next raise interest rates in July and December," the senior economist and currency strategist says. USD/JPY edges 0.1% higher to 149.49; AUD/JPY rises 0.2% to 95.13; EUR/JPY is up 0.1% at 163.48. (ronnie.harui@wsj.com)

The yen weakens against other G-10 and Asian currencies in the morning session amid risk-on sentiment spurred by Wall Street's gains overnight. The main theme has been risk-on, Commerzbank Research analysts say in a research report. Investors have welcomed a modest rise in U.S. retail sales and taken a breather from last week's round of tariff escalation, the analysts add. Also, "President Trump said he'll speak with Russian President Putin today as the U.S. pushes for a ceasefire between Ukraine and Russia," the analysts add. USD/JPY rises 0.2% to 149.47; AUD/JPY adds 0.2% to 95.44; EUR/JPY is 0.1% higher at 163.15.(ronnie.harui@wsj.com)

Most safe-haven assets such as Treasurys and the yen are higher in the early Asian session amid growing fears of a U.S. recession. "Headlines of recession risk rising (from low levels) abound", NAB's Tapas Strickland says, noting President Trump's interview with Fox News on Sunday. "U.S. yields are unsurprisingly lower," the head of Market Economics says. Market pricing of Fed rate cuts has increased, with total of 81.6bps of rate cuts priced by end-2025 versus 70.7bps on Friday, Strickland adds. The 10-year Treasury yield is 3bps lower at 4.1926%; USD/JPY falls 0.3% to 146.76; AUD/JPY drops 0.3% to 92.21; EUR/JPY is down 0.2% at 159.16. (ronnie.harui@wsj.com)

AUD/JPY has eased amid weaker risk sentiment and more downside is likely in coming months as the global trade war to intensifies further, sapping risk appetite, says Carol Kong, economist at CBA. The pair will also be weighed down by narrower Australia‑Japan interest rate differentials as the Reserve Bank of Australia keeps cutting rates and the Bank of Japan keeps raising rates, she adds. Monday's Japanese labor cash earnings for January showed wage momentum continued to build which adds to the case for more BoJ rate hikes this year, Kong says. Another positive print on Japan's household spending at 2330 GMT will also bolster expectations of faster BoJ rate hikes, she says. AUD/USD now at 92.30. (james.glynn@wsj.com; @JamesGlynnWSJ)

The yen is mixed against the G-10 and Asian currencies, but may be supported by prospects of more BOJ rate increases. "Another solid Shunto outcome this year will raise the chances of more Bank of Japan interest rate hikes," CBA's Kristina Clifton says, citing news that Japan's biggest labor union group said unions were demanding stronger wages growth this year. "We expect 25bp hikes in July and December," the senior economist and senior currency strategist says in a note. 'Shunto' refers to annual spring wage negotiations in Japan. USD/JPY edges 0.1% lower to 147.89; EUR/JPY is little changed at 159.56. (ronnie.harui@wsj.com)

The yen weakens against most other G-10 and Asian currencies in the morning session amid improved risk sentiment. The USD/JPY and EUR/JPY have rebounded, partly owing to optimism over increased EU defense spending, Nomura's research analysts say in a research report. Also, the White House's announcement overnight of a one-month tariff reprieve for auto imports from Mexico and Canada, is likely helping to bolster risk appetite. USD/JPY rises 0.2% to 149.24; EUR/JPY gains 0.3% to 161.15. (ronnie.harui@wsj.com)