Demand for the Yen is back. Overview for 14.01.2022

USDJPY is falling at the end of the week; the Yen is happy with the possibility of the rate hike.  

The Japanese yen is rising against the USD on Friday. The current quote for the instrument is 113.86.

The Yen has been strengthening for almost the entire week due to the “greenback” weakness, which was significantly failed by the December CPI report from the US.  

However, a completely different factor that supports the Yen appeared today. Reuters, citing the Bank of Japan, announced that the Japanese regulator was considering raising the benchmark interest rate before inflation reached 2.0%. It’s rather unexpected and unusual. 

Most likely, it’s the regulator’s response to the stance of the US Fed and its monetary policy tightening. 

At the same time, the BoJ’s current policy is considered ultra-soft and the regulator is planning to keep it at least until the end of 2022. However, in the light of new circumstances, investors should bear in mind the possibility of the rate hike and the QE tapering ahead of the schedule. 

The Yen is positive in its response to such news, even though it’s rather uncertain.