Yen Rises Amid BoJ Rate Hike Speculation

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Tuesday, as traders remain optimistic that the policies of Prime Minister Sanae Takaichi would stimulate the economy and encourage the Bank of Japan (BoJ) to continue on its road toward normalization.

Amid speculation over the fiscal and monetary policy path, Bank of Japan Governor Kazuo Ueda said he discussed economic and financial conditions in general with Prime Minister Takaichi during a regular meeting.

Traders expect that the Bank of Japan will hike interest rates in April.

In economic news, data from the Ministry of Economy, Trade, and Industry showed that Japan's tertiary activity index decreased for the second straight month in December. The seasonally adjusted tertiary activity index fell 0.5 percent on a monthly basis, following a 0.4 percent decline in November.

Meanwhile, the Asian stocks traded mixed, as investors monitored the latest developments on the geopolitical front and awaited cues from upcoming U.S. economic readings, including gross domestic product data, PCE inflation figures and minutes from the Federal Reserve's last meeting.

Trading volumes were thin as markets in mainland China, Hong Kong, Singapore, Taiwan and South Korea were closed for the Lunar New Year holidays.

In the Asian trading today, the yen rose to a 5-day high of 181.03 against the euro and a 4-day high of 208.05 against the pound, from yesterday's closing quotes of 181.93 and 209.25, respectively. If the yen extends its uptrend, it is likely to find resistance around 179.00against the euro and 206.00 against the pound.

Against the U.S. dollar and the Swiss franc, the yen advanced to 152.85 and 198.75 from Monday's closing quotes of 153.51 and 199.48, respectively. The yen may test resistance near 151.00 against the greenback and 194.00 against the franc.

The yen climbed to a 4-day high of 0.7047 against the Australian dollar, from Monday's closing value of 0.7072. On the upside, 0.68 is seen as the next resistance level for the yen.

Against the New Zealand and the Canadian dollars, the yen edged up to 92.13 and 112.01 from yesterday's closing quotes of 92.60 and 112.57, respectively. The next p ossible upside targets for the yen are seen around 90.00 against the kiwi and 111.00 against the loonie.

Looking ahead, U.S. ADP weekly employment data, Canada CPI data for January, Canada wholesale sales data for December, U.S. New York Empire state manufacturing index for February and U.S. NAHB housing market index for February are slated for release in the New York session.