ForexLive Asia-Pacific FX news wrap: USD/JPY drops under 152.00 (bounces back)

• Federal Reserve Board Governor Christopher Waller is speaking on Thursday
• Panama Canal authority says its made no change to canal fees
• BoA expect just 3 RBA interest cuts in 2025, terminal rate of 3.6%
• US Treas Secretary Scott Bessent – more on Trump wanting lower 10 yr yield, not short term
• The Nissan – Honda merger is off
• Ex-RBA official Australia’s weak economy, sticky CPI, trade uncertainty risk 2soft landing
• Tamura says BoJ must raise short-term interest rates to at least 1% by the H2 fiscal 2025
• US government vessels to sail free through Panama Canal
• BOJ’s Tamura makes his case again for faster interest rate hikes
• PBOC sets USD/ CNY mid-point today at 7.1691 (vs. estimate at 7.2535)
• Fed’s Jefferson says happy to keep Fed Funds on hold at current rate
• Japan’s fin min Kato sees inflation pressure continuing to rise
• Nothing from Bank of Japan Board Member Tamura Naoki yet
• Australian December trade surplus comes in at AUD5085mn, below estimate of AUD7000mn
• Fed’s Jefferson does not offer anything much new on the economy or policy in his speech
• The Bank of England (BoE) is expected to cut interest rates by 25bp at its meeting today
• Goldman Sachs dismisses bubble concerns over US equity market dominance
• BoJ hawk Naoki Tamura is scheduled to speak soon
• JP Morgan maintains view that US-China tariff war likely to escalate, all the way to 60%
• USD/JPY forecast to 145
• Bitcoin to Hit US$500K by 2028 – forecast by Standard Chartered
• JP Morgan see a much weaker Chinese yuan due to Trump tariffs, PBoC to step in
• Forexlive Americas FX news wrap 5 Feb: Yields move lower helped by lower ISM services
• Trump’s Treasury Secretary Bessent threatens the largest tax hike in history
• Trade ideas thread – Thursday, 6 February, insightful charts, technical analysis, ideas

We
had remarks today from hawkish Bank of Japan policy board member
Naoki Tamura who urged his colleagues to continue tightening, saying,
amongst a lot else (see the posts above for details), that short-term
interest rates should be raised to at least 1% by the second half of
fiscal 2025 to manage rising inflation risks. I noted that the fiscal
year in Japan runs April 1 – March 30, so H2 of FY 2025 implies BoJ
rates to 1% some time after around September this year. This does not
strike me as really hawkish, we’re half-way there to 1% already.

USD/JPY
dropped down to lows of around 151.80 before bouncing back above
152.00. Yen crosses followed a similar pattern.

AUD,
NZD and CAD were a weak bunch, although moves have not been large.

News
and data flow was of lower tier importance.

One
item to note, though, were comments from US Treasury Secretary
Bessent saying the administration is focused on driving the yield on
10 year Treasuries lower, not necessarily shorter-term rates. If this
is a goal of the admin it’d mean addressing US fiscal health, as
well as inflation. Will Trump follow through? There is more in the
post above (near the top of the page).

Coming
up soon is the Bank of England decision – expectations are for a
25bp rate cut and guidance remaining for a gradual pace of cuts
ahead. The vote is expected to be 8-1 (which is very similar to my
football teams’ usual weekend scoreline, don’t ask me which way
please 😉 )

This article was written by Eamonn Sheridan at www.forexlive.com.