The strong dollar pushes down the Japanese yen, with USD/JPY declining in line with the clearly slowing US economy.

The Japanese Yen Continues to Face Downward Selling Pressure Today

The Japanese Yen remains under continuous pressure as the US dollar continues to be notably strong. Currently, USD/JPY is trading at 157.00, marking the third consecutive day of gains. The main catalyst comes from US labor market data signaling the strength of the Western economic powerhouse.

US Economic Data Sends the Dollar Soaring, Weighing on the Yen Today

The US Department of Labor recently released data indicating a stable labor market. Initial unemployment claims totaled 208,000, below the forecast of 210,000 and lower than the revised previous week(200,000). An even clearer signal is the four-week moving average of initial claims, which decreased to 211,750 from 219,000, suggesting positive momentum in the labor market.

Meanwhile, the continuing claims increased from 1.858 million to 1.914 million. Overall, the data alleviates some investor concerns about a potential slowdown in the labor market.

US Trade Balance Surpasses Expectations, Further Supporting the Dollar

In addition to labor market data, the US trade balance also showed a significantly better-than-expected result. The goods and services deficit narrowed to $29.4 billion in October, beating the forecast of $58.9 billion and improving markedly from the previous month(48.1 billion). This is the smallest deficit since June 2009.

This data reflects a decline in imports to the lowest level in 21 months, while exports climbed to historic highs amid volatility from tax policies.

US Dollar Index Rises Strongly, Japan’s Yen Faces Heavy Pressure from Both Sides

The US Dollar Index (DXY), which measures the dollar’s value against a basket of six major currencies, trades around 98.85, remaining near its monthly high. US Treasury yields have also increased simultaneously. Both factors support the dollar’s continued strength, putting the Yen at risk of further depreciation.

Federal Reserve (Federal Reserve) Shows No Urgency to Cut Interest Rates

CME FedWatch tool indicates an 88% probability that interest rates will remain unchanged at the January 27-28 meeting. However, investors still expect two rate cuts this year. The upcoming non-farm payrolls (NFP) report due this Friday is likely to be a key indicator for short-term market expectations.

Japan Faces Multi-Dimensional Pressures Amid Tensions with China

In Japan, the Yen continues to face pressure from multiple variables, including rising tensions with China and domestic labor market conditions. Beijing recently announced export restrictions on “dual-use” (dual-use) goods to Japan, citing national security concerns. Additionally, an investigation into dumping practices regarding dichlorosilane (dichlorosilane) imports from Japan has begun, a critical chemical used in semiconductor manufacturing.

Japanese Labor Cash Remains Weak

Another factor contributing to the Yen’s vulnerability is the continued weakness in Japan’s labor cash. In November, labor cash grew by only 0.5% year-over-year, below market expectations of (2.3%), and significantly down from 2.6% in the previous month.

Overall Currency Movements: US Dollar Outperforms Other Currencies

Currently, the US dollar is strongest against the New Zealand dollar, gaining 0.37%. The Yen faces slight selling pressure of 0.03% against the US dollar. The Euro rose by 0.07%, the Pound Sterling by 0.11%, and the Canadian dollar by 0.03%. The Australian dollar increased by 0.34%.

Overall, the Japanese Yen today continues to face pressure from multiple fronts—driven by the US economy’s strength and domestic factors within Japan, which have yet to weaken sufficiently to support a stronger Yen.