EconoTicker

Japan’s yen rebound is prompting analysts to reassess how the government may view the desired pace of future BOJ rate hikes. After sliding close to the psychologically important 160-per-dollar level in January, the yen jumped nearly 3% last week—its largest weekly gain since November 2024—reducing immediate pressure on policymakers to “defend” the currency via faster tightening. The dollar was last at 152.66 yen in Asia on Monday, underscoring how quickly FX dynamics can shift ahead of key policy decisions.

The Indian rupee weakened modestly, with USD/INR up 0.2% to around 90.7, signaling mild USD strength against INR. In Singapore, USD/SGD also ticked higher after non-oil exports for January came in weaker than expected, a data point that can dampen growth optimism and keep the SGD slightly on the back foot.

Chinese markets will remain closed for the rest of the week, shifting near-term price discovery to offshore trading. In that backdrop, the yuan’s offshore pair USD/CNH fell 0.2% to 6.89, as traders positioned for seasonal yuan demand linked to the Lunar New Year holiday period—typically supported by conversion needs and cash demand.

Iranian strongman Alireza Zarfchi said in an emotional video that he is resigning from all of his official roles in the sport, citing his positions as head of the national referees/coaches committee, chief referee of Mardan-e Ahanin (Iran’s “Iron Men”), and a national team coach.

Zarfchi said he is making the decision in memory of Masoud Zatparvar, a bodybuilding champion killed during the January protests, stressing: “He was a protester, not a terrorist.”

Iran International reported Zatparvar was killed on 18 Dey in Rasht by live ammunition, as economic and political tensions continue to spill into sport and public life.

The Australian dollar surged to a three-year high on Wednesday after hawkish remarks from RBA Deputy Governor Andrew Hauser pushed traders to ramp up expectations for another rate hike later this year.

AUD/USD climbed 0.8%, breaking above $0.71 for the first time since early 2023, after Hauser warned that inflation pressures remain persistent and signaled the central bank would not hesitate to act again if needed to safeguard price stability. Markets read the message as reinforcing the RBA’s tightening bias, lifting near-term hike pricing.

The move comes after the RBA’s last decision to raise rates 25 bps to 3.85%, and was further supported by a softer U.S. dollar ahead of key U.S. jobs data later in the session—data that could reshape expectations for the Fed’s path.

Asian FX trading was thinner with markets in Japan closed for a holiday, but the yen notched a third straight session of gains, strengthening to 153.3 per dollar. The move has traders debating whether the yen is getting an extra lift from Tokyo-related support/intervention chatter or simply riding a broader bout of U.S. dollar softness.

Since Prime Minister Sanae Takaichi’s sweeping election victory on Sunday, the yen is up about 2.5% against the dollar—confounding expectations that concerns around her stimulus plans would keep pressure on the currency and Japanese government bonds. The market takeaway: for now, politics has translated into JPY strength, not the weaker-yen/ higher-yields outcome some had positioned for.

Asian currencies traded with a mixed tone in early week flows, with Singapore’s dollar steady, the Korean won weakening modestly, and the Indian rupee hovering above a key level after a central-bank signal that kept inflation risks front and center.

• USD/SGD: Flat — the Singapore dollar held steady, suggesting a broadly balanced positioning at the open.
• USD/KRW: +0.2% — the won softened slightly, pointing to mild USD strength versus Korea.
• USD/INR: Up slightly, staying above 90 — the rupee remains on the back foot after the Reserve Bank of India last week kept rates unchanged but raised its inflation and growth forecasts, a combination that signals persistent price pressures and keeps policy expectations—and FX sensitivity—elevated.

The Australian dollar strengthened in early trading, with AUD/USD up 0.2%, pushing the currency back above the $0.70 level as investors priced in additional interest rate hikes from the Reserve Bank of Australia (RBA) this year.

The move follows the RBA’s 25 bp rate increase last week and a hawkish policy signal, with policymakers emphasizing the challenge of sticky inflation—a backdrop that keeps the rates channel supportive for the Aussie as long as markets believe tightening isn’t done.

The Chinese yuan strengthened slightly in Asian trade, with USD/CNY down 0.1% to 6.92, but the pair remained near levels last seen in mid-2023, highlighting that the currency is still trading close to a multi-month weak zone despite recent stabilization.

The yuan’s recent firming has been underpinned by continued policy support from the People’s Bank of China (PBOC), which has repeatedly set aggressively strong daily fixings (midpoints)—a signal to markets that authorities remain intent on curbing excessive depreciation pressure.

The Japanese yen strengthened at the start of the week as intervention speculation picked up following Takaichi’s victory, adding a fresh layer of policy risk to the FX market.

The USD/JPY pair fell 0.4% to 156.37, after sliding more than 0.5% earlier in the session—an intraday move consistent with traders reducing exposure to a sudden policy response as the currency nears politically sensitive levels.

Currency markets appeared to be finding a footing after last week’s sharp drop in the dollar. The euro traded around $1.1809 in the Asia session, off the late-January highs above $1.20. The yen was near 155.41 per dollar, having retraced about half of the gains it made versus the greenback after chatter about possible joint United States–Japan intervention aimed at boosting the yen.

The Australian dollar eased 0.34% to $0.6987, and the New Zealand dollar fell 0.5% to $0.6015, giving back some gains as the U.S. dollar found a footing after a Trump-triggered selloff. The Aussie had earlier touched $0.70225—its highest since February 2023—after hotter inflation data lifted expectations of an RBA hike, but broader FX trading remained dominated by the Fed event risk and the dollar’s sharp slide and partial rebound.