FX.co ★ Yen Firms Up as Oil Prices Drop

The Japanese yen firmed to around 157.6 per dollar on Tuesday after briefly approaching 159 in the previous session, as declining energy prices eased pressure on Japan’s oil-dependent economy. The currency also benefited from a weaker US dollar, with expectations of a swift end to the Iran conflict reducing safe-haven demand for the greenback.

Trump stated that the US military operation in Iran is nearing completion and is progressing well ahead of the original four- to five-week estimate. He also indicated plans to waive certain oil-related sanctions and deploy the US Navy to escort tankers through the Strait of Hormuz in an effort to stabilize oil prices.

In Japan, fourth-quarter GDP growth was revised up to 0.3% from an initial 0.1%, driven by solid domestic demand. Earlier figures also showed that real wages rose for the first time in 13 months, strengthening the Bank of Japan’s case for continued monetary policy normalization and giving the government greater room to advance its key policy priorities.