This week’s focus will be on the yen’s movement following the release of Japan’s GDP data early in the week and confirming the direction of the dollar market based on the FOMC minutes later in the week. Japan’s Q4 GDP quarter-on-quarter growth was 0.1%, below market expectations, but the Q4 GDP deflator quarter-on-quarter growth was 3.4%, exceeding forecasts.
With few market participants active, the yen was sold off following the early morning release of Japan’s GDP data. While the potential for increased USD/JPY volatility presents an opportunity to take positions, today is a U.S. holiday (President’s Day), resulting in market closures.

Last week’s US employment report showed relatively strong numbers. USD/JPY surged to the upper 154 yen range but instantly plummeted about 2 yen on heavy selling. It rebounded afterward, but selling pressure capped the upside, ultimately pushing it down to the low 152 yen range. Why is USD/JPY so heavy after the House of Representatives election?
The consensus was that if Ms. Takaichi’s policies continued, fiscal spending expansion would drive further yen selling. The fact that this isn’t happening suggests a significant shift in circumstances. Presumably, Japan must now ensure its long-term interest rates don’t rise, aligning with U.S. intentions. Under measured fiscal and monetary policies, a March rate hike has become increasingly likely.
Preparations for a level adjustment in the heavily sold-off yen may be quietly being made behind the scenes. Attention will focus on the “hawkish/dovish” leanings revealed in the FOMC minutes, showing what discussions took place at the Fed’s last meeting (January).