USD/JPY continues to rise amid strong US economic data, and the yen remains weak today.

The Dollar Remains Strong While the Yen Weakens

USD/JPY rises for the third consecutive day, trading around the 157.00 level. The surge is driven by the strength of the US dollar in the broad market. Meanwhile, the yen remains under pressure from various factors today. The US dollar index (DXY), which measures the dollar’s strength against a basket of six major currencies, stays near its one-month high at 98.85, supported by rising US government bond yields.

Positive Signals from the US Labor Market

US employment wage data help ease concerns about a slowdown in the labor market. The number of initial unemployment claims for the week ending January 3rd was 208,000, below the expected 210,000 and an improvement from the previous week. Continuing claims increased to 1.914 million from 1.858 million. The four-week moving average for initial claims decreased to 211,750 from 219,000. These signals indicate that the US labor market can still maintain a solid foundation.

Trade Balance Improves Significantly

Beyond the labor market, the US goods and services trade deficit also improved markedly, narrowing to only $29.4 billion in October, much better than the expected $58.9 billion, and an improvement from the previous month’s deficit of $48.1 billion. This is the lowest deficit since June 2009. Imports fell to their lowest level in 21 months, while exports surged to historic highs amid trade tensions.

The Fed Can Still Stay Calm

Overall, positive data from the US alleviates concerns about a slowdown in the labor market, supporting the view that the Fed can keep interest rates steady in the near future. The CME FedWatch tool indicates an approximately 88% market expectation that interest rates will remain unchanged at the January 27-28 meeting. However, investors still anticipate two rate cuts this year, and the upcoming NFP report on Friday could influence short-term expectations.

The Yen Faces Multiple Pressures Today

In Japan, the yen faces multiple headwinds. Tensions in China-Japan relations have increased, with Beijing announcing export controls on “all uses” to Japan for national security reasons, and beginning an investigation into market manipulation of decarchlorosilanes, a key raw material in the semiconductor industry. Domestically, Japan’s wage growth in November remains weak, increasing only 0.5% year-on-year, below the expected 2.3%, and down from 2.6% in the previous month.

Major Currency Movement Map

The currency movement table shows that USD/JPY increased by 0.03%. The US dollar is strongest against the New Zealand dollar, which rose by 0.37%. The Swiss franc (CHF) is the weakest among the group. The heatmap displays the percentage change of major currencies against each other. Selecting USD from the left column and following to JPY from the top row, the data shows a 0.03% change in USD/JPY.