The USD/JPY pair declines to approximately 153.15 during the early European session on Wednesday. Market participants speculate that Japan’s Prime Minister Takaichi may adopt a more fiscally responsible approach. The expectation for US NFP in January is an increase of 70K. The USD/JPY pair declines to approximately 153.15 in the early European trading session on Wednesday.
Investors are flocking to Japanese equities, driven by expectations of stimulus measures benefiting consumers and corporations, which in turn is likely to enhance demand for the Japanese Yen. Attention will be focused on the US January jobs data released later on Wednesday, as it may provide insights into the direction of Federal Reserve policy. Japan’s benchmark Nikkei 225 stock average achieved its all-time closing high for the third consecutive day on Wednesday, as buying momentum persisted following Sunday’s general election.
Increased foreign inflows into Japanese equities elevate demand for the JPY, presenting a headwind for the pair. “Such a sweeping victory hands the Takaichi regime better control over the JGB-bearish and the yen-bearish aspects of the so-called Takaichi trade,” stated Vishnu Varathan. Furthermore, analysts at Deutsche Bank are optimistic, indicating that there are encouraging signs suggesting that more market-friendly policies could be forthcoming. Market participants will monitor the US jobs report, which has been delayed slightly due to the recent conclusion of the four-day government shutdown. Market participants anticipate an increase in Nonfarm Payrolls by 70K, building on the 50K rise observed in December.
Meanwhile, the Unemployment Rate is expected to hold steady at 4.4%, while the Average Hourly Earnings are anticipated to decrease to 3.6% from 3.8%. Should US economic data exceed expectations, it may bolster the Greenback’s position relative to the JPY.