Ella 
In early Asian trading on Tuesday, USD/JPY fell below the 146.00 mark. USD/JPY gains are supported by overall strength in the U.S. dollar (USD). Investors are awaiting the release of the U.S. New York Empire State Manufacturing Index on Tuesday for new impetus, with the index expected to record -5 in January from -14.5 in the previous month. As of press time, USD/JPY was trading at 145.90, up 0.08% on the day.
Data released by the Statistics Bureau of Japan on Tuesday showed that Japan’s producer price index (PPI) increased by 0.3% on a monthly basis in December, higher than the expected 0%. The annual rate of PPI data in December was the same as the previous value of 0.3%, which was higher than the expected value of -0.3%.
Bank of Japan Governor Kazuo Ueda stressed the need to maintain ultra-loose monetary policy as he awaited further data that might show whether inflation will persist. He further stated that when the central bank is confident enough to achieve sustainable inflation of 2%, the central bank will cancel negative interest rates.
Additionally, there are reports that Iran’s Revolutionary Guards have been deployed to assist Houthi terrorists in Yemen. That said, escalating tensions in the Middle East could boost safe-haven flows and benefit the Japanese yen (JPY).
On the other hand, market participants expect the Federal Reserve to cut interest rates as soon as possible at its March meeting. The CME FedWatch Tool shows that the market believes that the probability of the Fed cutting interest rates in March is close to 71%. Raphael Bostic, president of the Federal Reserve Bank of Atlanta (Fed), said that if policymakers cut interest rates too early, inflation could “reverse.” Bostic added that inflation must return firmly and surely to our 2% goal.
