📊 Hawkish BOJ stance supports JPY despite bleak economic data

The USDJPY exchange rate climbed towards 152.000 on Tuesday in response to weaker-than-anticipated Japan's economic indicators. 👉 Possible effects for traders On Monday, the release of Japan's Gross Domestic Product (GDP) report for Q4 and recent inflation figures reinforced the anticipation of interest rate hikes by the Bank of Japan (BOJ). The core machinery orders in Japan, a crucial indicator of capital expenditures, unexpectedly declined in December. Moreover, Japan reported a larger-than-expected trade deficit for January, with imports exceeding exports. Despite the weak data, the Japanese yen (JPY) is supported by the expectation that the BOJ will continue to raise interest rates this year. However, there is still uncertainty about whether the regulator will implement another rate increase in March. The prospects for a rate hike at the July meeting are growing, but there are still questions about the pace and extent of further tightening measures. From an external perspective, the Japanese yen has been under pressure due to the strengthening U.S. dollar (USD). Recent threats of trade tariffs from U.S. President Donald Trump compounded the situation, with the president announcing plans to impose tariffs of approximately 25% on automobiles, imported semiconductors, and pharmaceuticals. USDJPY rebounded from the 152.000 level and continued to decline during Asian and early European trading hours. This week's main events are a speech by BOJ board member Hajime Takata on Wednesday and Japan's Consumer Price Index data release on Friday.