Today market analysis on behalf of Bas Kooijman is the CEO and Asset Manager of DHF Capital S.A
30th January 2025
The Japanese yen continued to appreciate as Japan maintained a tighter stance regarding its monetary policy, while other major central banks pivoted toward easing. The European Central Bank is expected to cut rates by 25 basis points, with further reductions likely if inflation pressures ease and economic growth slows. A dovish tone from ECB President Christine Lagarde could weigh on the euro, benefiting the yen. In the U.S., the Federal Reserve kept rates unchanged. The potential for lower U.S. yields and additional interest rate cuts could favor the yen.
Meanwhile, Japanese officials could continue to reaffirm a tightening outlook, reinforcing support for the yen against both the dollar and the euro. As a result, Japanese yields could remain near their high and eventually increase gradually. Attention is also turning to Japan’s core CPI for Tokyo, which rose 2.4% year-on-year in December 2024, with market consensus pointing to a 2.5% rise in January. Strong-than-expected inflation could push the yen further up against other major currencies.