Yen Rises Amid BoJ Rate Hike Bets

The Japanese yen recovered from recent losses against other major currencies in the Asian session on Tuesday, as traders started speculating that the Bank of Japan (BoJ) will raise interest rates at its policy meeting on Friday.

Around 92 percent of the traders anticipate a hike in rates from 0.25 percent to 0.50 percent in the January 23-24 policy meeting.

The BOJ officials also believe there is a good possibility that rates will rise, as long as Trump doesn't cause too many unfavorable shocks right away.

Japan's Vice Finance Minister for International Affairs and top foreign exchange official, Atsushi Mimura, said that a weak yen would push up inflation by boosting import costs, stressing the need to underpin consumption by turning real wages to positive territory.

U.S. President Donald Trump announced plans to impose 25 percent tariffs on imports from Canada and Mexico, and said tariffs in China could hinge on a deal over TikTok's ownership.

Trump held off from imposing sweeping trade tariffs in his first day in office and announced a national energy emergency in order to end the inflation crisis.

In the Asian trading today, the yen rose to more than 1-month high of 154.77 against the U.S. dollar, from a recent low of 156.24. The yen is likely to find resistance around the 148.00 region.

Moving away from an early 6-day low of 171.84 against the Swiss franc, the yen edged up to 170.75. The next possible upside target for the yen is seen around the 169.00 region.

Against the euro and the pound, the yen edged up to 160.96 and 190.48 from an early low of 161.95 and 191.62, respectively. If the yen extends its uptrend, it is likely to find resistance around 158.00 against the euro and 188.00 against the pound.

Looking ahead, Germany's ZEW economic confidence survey results for January are due at 5:00 am ET in the European session. The economic sentiment index is expected to fall to 15.2 in January from 15.7 in December.

In the New York session, Canada CPI reports for December are slated for release.