Forex News
ING's Senior Economist Min Joo Kang argues that stronger Japan GDP data and resilient private spending support continued Bank of Japan (BoJ) policy normalisation, with a rate hike more likely in June than April. Limited gasoline price pressures and government energy measures give the BoJ time to monitor wage growth, Shunto outcomes and April inflation before deciding on the next move.
BoJ seen delaying next hike to June
"Japan’s GDP expanded more than expected in the last quarter of 2025, and household spending on goods and private services remains on track in January. With retail gasoline prices contained, the Bank of Japan is likely to delay any rate hike to June, standing pat in April."
"Government spending is expected to rise in the current quarter, while energy subsidies and strong wage growth are set to boost private consumption. Inventory was a drag on growth for the second straight quarter. But we expect the restocking cycle to reverse and begin contributing positively to the current quarter."
"Despite the soft headline, underlying spending on goods and private services still seems resilient. Combined with solid wage data (real wage growth of a 1.4% YoY in January) from yesterday, recent trends support our view that private spending is expected to remain firm in the current quarter."
"Combining all these factors, the Bank of Japan will likely continue its policy normalisation."
"More importantly, tracking April inflation, especially service prices, will be quite important as companies tend to adjust their prices in the first month of the fiscal year."
"Overall, the probability of a rate hike in April is likely to rise if initial Shunto results exceed expectations. Additionally, we will pay close attention to comments from BoJ officials, as their communications often provide indications regarding potential rate hikes ahead of policy meetings."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- AUD/JPY gathers strength to around 183.30 in Tuesday’s early European session.
- The cross keeps the constructive outlook intact above the key 100-day EMA and bullish RSI momentum.
- The initial support level to watch is 110.10; the first upside barrier emerges at 112.50.
The AUD/JPY cross trades in positive territory near 111.80 during the early European session on Tuesday. The Australian Dollar (AUD) strengthens against the Japanese Yen (JPY) as China's trade surplus grew more than expected at the beginning of 2026, driven by a significant surge in exports.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said on Tuesday that volatility in oil prices and the Middle East is a genuine challenge for the central bank. Hauser further stated that the response depends on the size and persistence of the price shock, which is very uncertain.
Traders will closely monitor the developments surrounding the Middle East conflict. Any signs of escalating tensions or a prolonged war could boost the safe-haven currencies such as the JPY and act as a headwind for the cross.
Technical Analysis:
In the daily chart, AUD/JPY trades at 111.79. The near-term bias is bullish as price extends well above the rising 100-day exponential moving average near 105.60, confirming a mature uptrend rather than a short-term spike. Spot holds firmly above the Bollinger middle band around 110.10 and works closer to the upper band at 112.50, signalling persistent upside pressure within an expanding volatility backdrop. The RSI at 65 stays in bullish territory but below overbought extremes, indicating strong momentum with room for further gains before signals of exhaustion emerge.
Initial support is located at the Bollinger midline and recent consolidation area near 110.10, followed by stronger support at 109.20, where prior range highs align with the lower half of the recent band structure. A deeper pullback would expose the 107.70 area, which coincides with the lower Bollinger Band region from late February and guards the 100-day EMA zone around 105.60. On the topside, immediate resistance emerges at the current upper Bollinger Band near 112.50, with a sustained break opening the way toward the 114.00 region as the next upside target within the prevailing bullish trend.
(The technical analysis of this story was written with the help of an AI tool.)
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.
DBS Group Research’s Radhika Rao explains that the US and India have agreed a trade deal cutting reciprocal tariffs to 18%, with the final rate contingent on India continuing to reduce Oil imports from Russia. The move aligns India’s tariff levels closer to ASEAN peers and is expected to benefit sectors like textiles, gems, engineering goods, leather and chemicals.
US–India deal reshapes trade landscape
"US President Trump announced overnight that US and India had agreed on a trade deal, under which reciprocal tariffs on India will be lowered to 18% from 25% earlier."
"There was no explicit mention of how the additional punitive tariff of 25% (due to Russian oil purchases) will be treated, although US Ambassador to India Sergia Gor said in press comments, that the final tariff rate will stand at 18% (vs 50% earlier)."
"This was contingent on the country continuing to cut back on oil purchases from Russia."
"US President's social media post also indicated that India had agreed to reduce its tariffs and non-tariff barriers, while making commitments to step up purchases from the US to “over $500bn” of energy, technology, agricultural, and coal supplies etc, without alluding to any timeline."
"In return, India’s PM Modi said, on his social media handle, that “Made in India” products will now have a reduced tariff of 18%. This effectively takes India’s tariff close to most of the ASEAN countries and puts it at an advantageous position vs China."
"Textiles, gems & jewellery, engineering goods, leather and chemicals are likely amongst the key gainers."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Bank of Japan (BoJ) Executive Director Koji Nakamura said on Tuesday that it’s appropriate to conduct a bond taper in a predictable manner. Nakamura further stated that he will listen to views of various market players in compiling a new bond taper plan at the June policy meeting.
Key quotes
Will listen to views of various market players in compiling new bond taper plan at June policy meeting.
Our bond taper so far has helped improve market functioning but we are mindful our presence in bond market remains big.
Appropriate to conduct bond taper in predictable manner.
Market reaction
At the time of writing, the USD/JPY pair is trading 0.08% lower on the day at 157.55.
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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