Forex News
Japan’s Finance Minister Satsuki Katayama said on Tuesday that she will continue to closely coordinate with US authorities as needed, based on a joint Japan and US statement issued in September last year, and respond appropriately.
Key quotes
Will not comment on no foreign exchange intervention conducted.
Prime Minister Takaichi discussed forex benefits as general fact.
Prime Minister Takaichi did not emphasize benefits of weak yen.
Will not comment on specific forex levels.
We will continue to closely coordinate with U.S. authorities as needed, based on a joint Japan and United States statement issued in September last year, and respond appropriately.
Regularly coordinate with United States authorities at various levels.
Takaichi discussed general textbook facts when she spoke about weak yen benefits.
Closely communicating with US Bessent.
Expecting excess of 4.5 trillion yen from currency reserves in this fiscal year.
Market reaction
As of writing, the USD/JPY pair is down 0.07% on the day at 155.50.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
US President Donald Trump said he will slash tariffs on India to 18% after Prime Minister Narendra Modi agreed to stop buying Russian oil, Bloomberg reported on Monday.
Trump added that India will also “move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO” as well as purchase “over $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and many other products.”
Market reaction
As of writing, the USD/INR pair is down 1.39% on the day at 90.61.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
- The Reserve Bank of Australia is set to hike the interest rate by 25 bps to 3.85% in February.
- RBA Governor Bullock’s words and updated economic forecasts could offer hints on future rate hikes.
- The Australian Dollar braces for intense volatility on the RBA policy announcements.
The Reserve Bank of Australia (RBA) is widely expected to raise the Official Cash Rate (OCR) to 3.85% from 3.6% after concluding its first monetary policy meeting of 2026.
The decision will be announced on Tuesday at 03:30 GMT, accompanied by the Monetary Policy Statement (MPS) and the quarterly economic forecasts, followed by RBA Governor Michele Bullock’s press conference at 04:30 GMT.
The Australian Dollar (AUD) is set to rock in reaction to the RBA policy announcement and updated economic projections.
RBA is set to break the global easing trend
The RBA is on track to deliver its first interest rate hike in more than two years when it meets on Tuesday for its February monetary policy meeting, ditching the global easing trend in an attempt to curb the rising inflationary pressures.
During the press conference following the December monetary policy decision, Governor Michele Bullock explicitly said, “the Board will do what it needs to do to get inflation down,” adding that “If data suggests inflation is not slowing, that will be considered at the Feb board meeting.”
Data from the Australian Bureau of Statistics (ABS) showed last Wednesday that the monthly Consumer Price Index (CPI) leaped to 3.8% in December from 3.4% in November and above forecasts of a 3.6% rise.
The trimmed mean CPI, the RBA’s closely watched measure of core inflation, rose 0.9% quarterly in the fourth quarter, beating the market forecasts of a 0.8% increase.
Following the hot inflation numbers, money markets implied a 73% probability of a rate hike, compared with 60% previously, according to Reuters.
Meanwhile, Australia’s big four banks, including the ANZ, Westpac, Commonwealth Bank of Australia and the National Australia Bank (NAB), altered their call, forecasting a quarter-point RBA rate hike in February.
Another economic indicator backing the expected rate lift-off was the Australian labor data. On January 22, the ABS said that the Unemployment Rate unexpectedly dropped to 4.1%, the lowest level since May, from 4.3%. Net employment jumped by 65.2K in December from -28.7K in November.
How will the Reserve Bank of Australia’s decision impact AUD/USD?
The AUD appears exposed to two-way risks against the US Dollar (USD) in the lead-up to the RBA showdown.
AUD/USD could snap the corrective trend and resume its uptrend if the RBA Governor Bullock’s comments and the updated economic forecasts suggest that more rate hikes remain on the table in the coming months.
Conversely, the Aussie pair could stretch its recent downtrend if RBA Governor Bullock plays down expectations of further rate hikes amid a potentially stable inflation projection.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical levels for trading AUD/USD following the policy announcement.
“AUD/USD is trading under the 0.7000 threshold ahead of the RBA rate call, holding its correction from a three-year peak of 0.7094 set on Thursday. The 14-day Relative Strength Index (RSI) has fallen sharply from the overbought region to currently test the 60 level, suggesting that the upward bias still remains intact.”
“The Aussie pair could reverse course and initiate a fresh uptrend toward the 0.7050 psychological level on a hawkish RBA rate hike. The next relevant resistance levels are aligned at the 2026 high of 0.7094 and the February 2023 high of 0.7158. Alternatively, the pair could challenge the 0.6900 area if the RBA disappoints the hawks. A firm break below that level will unleash additional downside toward the 0.6850 psychological barrier. The last line of defense for buyers is seen at the 0.6800 round figure,” Dhwani adds.
Economic Indicator
RBA Monetary Policy Statement
At the end of each of the Reserve Bank of Australia (RBA) eight meetings, the RBA’s board releases a post-meeting statement explaining its policy decision. The statement may influence the volatility of the Australian Dollar (AUD) and determine a short-term positive or negative trend. A hawkish view is considered bullish for AUD, whereas a dovish view is considered bearish.
Read more.Next release: Tue Feb 03, 2026 03:30
Frequency: Irregular
Consensus: -
Previous: -
Source: Reserve Bank of Australia
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
US President Donald Trump announced the creation of a US critical mineral reserve, Reuters reported on Monday. Trump further stated that the initiative will combine $10 billion in financing from the US Export-Import Bank (EXIM) and $2 billion from the private sector.
"Today, we're launching what will be known as Project Vault to ensure that American businesses and workers are never harmed by any shortage," Trump said at the White House.
Trump added that this move is aimed at cutting America’s dependence on China for materials essential to electric vehicles, defense systems and advanced technology.
Market reaction
As of writing, the AUD/USD pair is down 0.13% on the day at 0.6955.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
Taiwan's real GDP growth surged to 12.68% y/y in 4Q25, marking its fastest pace since 3Q87. The robust performance was driven by strong global demand for Taiwan's electronic components and ICT exports. The economy is projected to continue outperforming in 2026, with a GDP growth forecast of 3.5%, potentially increasing to around 5%, notes Ho Woei Chen, CFA, from UOB.
Export demand fuels growth outlook
"The sustained strength in export demand suggests that Taiwan’s economy could continue to outperform this year. Latest data showed Taiwan’s export orders rising by 43.8% y/y in Dec – fastest pace in nearly five years despite the increasingly high base."
"Taiwan’s trade deal with the US in Jan which lowers reciprocal tariffs on Taiwan goods to 15% from 20% in return for Taiwanese investments in the US, has helped ease policy uncertainty and placed Taiwan on a level competitive footing with Japan, South Korea, and the European Union."
"Despite elevated geopolitical tensions and persistent uncertainties surrounding US trade policy, we assess that the balance of risks to our 2026 GDP growth forecast — currently 3.5% — is tilted meaningfully to the upside, at around 5% which we will finalise after the release of the preliminary 4Q25 GDP on 13 Feb."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
• NZD/USD eased to 0.6008 on Monday, pulling back from seven-month highs near 0.6045 as the Kiwi consolidates strong January gains of around 5%.
• Tuesday brings Q4 labor market data; unemployment rate expected to edge down to 5.2% from 5.3%, which would be the first decline in four years.
• Markets pricing 80% chance of RBNZ rate hike by September after Q4 CPI surprised at 3.1% YoY, above the central bank's 1-3% target band.
The New Zealand Dollar (NZD) traded on a softer footing against the US Dollar (USD) on Monday, easing back from seven-month highs as the Kiwi consolidates after a stellar January rally. NZD/USD slipped to 0.6008, retreating from last week's peak near 0.6045 as profit-taking set in following a roughly 5% gain through January. The pair remains underpinned by shifting interest rate expectations following hotter-than-expected New Zealand inflation data.
Q4 employment data in focus for Tuesday
All eyes turn to Tuesday's release of New Zealand's fourth-quarter labor market statistics, due early Wednesday local time. Economists expect the unemployment rate to edge down to 5.2% from 5.3% in Q3, marking the first decline in four years and signaling that the jobs market may be stabilizing. Employment change is forecast to show positive growth after two consecutive quarterly declines, with some analysts expecting the strongest employment growth in around two years.
The labor data carries significant weight for the Reserve Bank of New Zealand (RBNZ) policy outlook. Signs of labor market stabilization would support the view that the economy is recovering from the RBNZ-induced slowdown, potentially limiting the scope for further rate cuts. However, sticky inflation remains the dominant factor; Q4 CPI surprised to the upside at 3.1% year-on-year, exceeding the RBNZ's 1-3% target band and shifting market expectations firmly toward rate hikes later this year.
RBNZ rate hike expectations build
RBNZ Governor Anna Breman notably refrained from pushing back against market expectations for a rate increase this year, a marked shift from her earlier tone when she had downplayed the likelihood of near-term hikes. Markets now price an 80% chance of a rate hike by September, with roughly a 50% probability of a move as early as July. The OCR currently sits at 2.25% following six cuts since August 2024, and the February 18 meeting is expected to see rates held steady.
USD supported by shutdown, Warsh nomination
The US Dollar Index (DXY) remained supported above 97.00 on Monday as the partial government shutdown extended into its third day. The Bureau of Labor Statistics (BLS) has confirmed that Friday's Nonfarm Payrolls release has been suspended until federal operations resume. Risk sentiment remained cautious as markets weighed the impact of the shutdown alongside President Trump's nomination of Kevin Warsh as the next Federal Reserve (Fed) Chairman.
NZ economic recovery signs emerge
Recent data showed New Zealand consumer confidence rose in January to its highest level since August 2021, while the trade surplus widened to NZ$52 million in December, above forecasts of NZ$30 million. These positive datapoints, combined with the potential for improving labor market conditions, add to the picture of a recovering New Zealand economy that may support the case for eventual policy tightening.
New Zealand Dollar price forecast
NZD/USD has pulled back from its recent test of seven-month highs near 0.6045, with the pair now consolidating around the 0.6000 psychological level. The retreat comes after a sharp January rally that saw the Kiwi climb nearly 5% against the Greenback, driven by the inflation surprise and shifting rate expectations. The 50-day Exponential Moving Average (EMA) is attempting to break above the 200-day EMA near 0.5850, setting up a potential golden cross that would confirm the bullish trend shift.
The 0.60 level has emerged as key near-term support, with a break below opening the door toward the 200-day EMA at 0.5850. On the upside, resistance is seen at the recent high of 0.6045, with a sustained break above this level potentially extending gains toward the 0.61 handle. The Relative Strength Index (RSI) has pulled back from overbought conditions near 76 and now sits in the mid-60s, suggesting some room for further upside without being overstretched.
Near-term direction will likely hinge on Tuesday's Q4 employment data. A better-than-expected labor market reading showing falling unemployment and positive job growth would reinforce the bullish case for the Kiwi and support bets on eventual RBNZ rate hikes. Conversely, weaker data could see profit-taking accelerate. Broader risk sentiment and the US government shutdown situation will also influence flows, with any resolution potentially dampening safe-haven USD demand and supporting risk-sensitive currencies like the NZD.
NZD/USD daily chart
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- USD/JPY rises to near 155.55 in Tuesday’s early Asian session.
- US manufacturing activity expanded by the most since 2022.
- The BoJ has signaled a gradual tightening path but remains cautious.
The USD/JPY pair attracts some buyers to around 155.55 during the early Asian session on Tuesday. The upbeat US economic data provides some support to the Greenback against the Japanese Yen (JPY). The Bureau of Labor Statistics (BLS) will not publish the January employment report on Friday as scheduled due to the partial government shutdown.
Data released by the Institute for Supply Management (ISM) showed on Monday that the US Manufacturing Purchasing Managers' Index (PMI) improved to 52.6 in January from 47.9 in December. This figure came in stronger than the market expectation of 48.5 and registered the strongest expansion since 2022.
This report suggested the US Federal Reserve (Fed) could remain on hold for an extended period, boosting the US Dollar (USD). Traders slightly reduced bets on Fed rate cuts following the upbeat PMI data. Money markets showed the next reduction coming in July.
Japanese Prime Minister Sanae Takaichi has called for a snap general election on February 8. Fiscal concerns and political uncertainty in Japan could weigh on the Japanese Yen in the near term. However, the Bank of Japan (BoJ) Summary of Opinions from the January 22-23 meeting revealed growing hawkishness. Board members warned against falling "behind the curve" on inflation and called for timely rate hikes if growth and inflation outlooks remain stable. This, in turn, might help limit the JPY’s losses.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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