Anna 
The Japanese yen is encountering continued weakness against the US dollar, marking the fourth consecutive day of decline, with USD/JPY nearing the psychological level of 145.00 in Asian markets. This trend has persisted for over two weeks, influenced by various factors impacting Japan’s economic landscape.
The recent earthquake on New Year’s Day has added challenges for the Bank of Japan (BoJ) in its efforts to lift negative interest rates later this month. The potential difficulty in implementing such measures is contributing to the yen’s depreciation. While speculation about a January adjustment is waning, investors remain confident that the BoJ will exit its ultra-easy monetary policy, possibly in April following annual wage talks in March or later in 2024. The expectation of this policy shift, coupled with overall weakness in the equity markets, is expected to help curb further losses in the safe-haven yen.
On the flip side, the US dollar is holding its ground after a recent recovery from multi-month lows. This resilience is attributed to diminishing expectations of more aggressive policy easing by the Federal Reserve. Positive US macroeconomic data released on Thursday, coupled with a revised outlook for fewer interest rate cuts in 2024, are supporting rising US Treasury yields, providing tailwinds for the dollar. However, cautious optimism among USD bulls prevails, with a wait-and-see approach in anticipation of the release of US non-farm payrolls (NFP) data. The NFP figures are anticipated to guide the Fed’s policy decisions and potentially offer significant momentum for USD/JPY.
