The Japanese yen rose in Asian trading on Tuesday against a basket of major and secondary currencies, extending its gains for a second consecutive session against the US dollar and hitting a two-week high, supported by negative pressure on the US currency ahead of the release of US monthly jobs data.

The yen’s advance is also supported by increased demand ahead of the Bank of Japan’s meeting on Thursday and Friday, as markets widely expect a 25-basis-point rate hike, marking the second step of monetary tightening this year.

Price Overview

Japanese yen price today: The US dollar fell 0.35% against the yen to ¥154.70, the lowest level since December 5, from an opening level of ¥155.21, after recording an intraday high of ¥155.24.

The yen ended Monday’s session up 0.4% against the dollar, marking its third gain in the past four days, amid continued unwinding of yen carry trades.

US Dollar

The US dollar index fell about 0.1% on Tuesday, extending losses for a second straight session and approaching a two-month low, reflecting continued weakness in the US currency against a basket of global currencies.

The dollar has remained under pressure since last week’s Federal Reserve meeting, after the outcome was less hawkish than markets had expected, reviving bets on the continuation of the US rate-cut cycle through 2026.

To reassess these expectations, traders are awaiting later today the release of the long-delayed US jobs report for October, which had been postponed due to the federal government shutdown.

Bank of Japan

The Bank of Japan meets on Thursday and Friday to discuss appropriate monetary policy for the world’s fourth-largest economy, amid strong expectations of a 25-basis-point rate hike to a range of 0.75%, the highest level since 2008 during the global financial crisis.

Markets are closely watching Governor Kazuo Ueda’s comments for guidance on the policy outlook for 2026, as expectations grow that the Japanese government may pursue further fiscal expansion, adding complexity to the policy backdrop facing the central bank.

Japanese Interest Rates

Following recent inflation and wage data in Japan, market pricing for a 25-basis-point rate hike at this week’s meeting has stabilized above 90%.

Bank of Japan Governor Kazuo Ueda recently struck a more optimistic tone on the Japanese economy, saying the central bank will assess the pros and cons of raising interest rates at its upcoming policy meeting.

Three government officials told Reuters that the Bank of Japan is likely to raise interest rates this December.

Views and Analysis

Analysts at Société Générale said they expect the Bank of Japan to raise interest rates to 1% by July next year, while also anticipating a rate hike when the policy decision is announced on Friday.

They added that once rates reach 1%, the Bank of Japan will enter uncharted territory, making a cautious tightening pace more likely, with gradual 25-basis-point increases and close monitoring of the impact on economic growth and price levels.

Société Générale analysts also expect intervals of no less than nine months to a full year between successive rate hikes.

Most cryptocurrencies fell in Monday trading as risk appetite weakened and investors pulled back from equities and bitcoin, ahead of key US economic data.

Investors are awaiting the release of US nonfarm payrolls data for November on Tuesday, which will also include the delayed October reading.

US consumer price inflation data is also due later this week, and is expected to play an important role in shaping Federal Reserve policy expectations.

New York Fed President John Williams said on Monday that last week’s interest rate cut by the US central bank has placed monetary policy in a good position to deal with the period ahead, adding that he expects inflation to ease as the labor market slows.

He stressed that bringing inflation back to the 2% target remains “critically important,” provided it does not create undue risks for the labor market.

Ripple

In trading, Ripple fell 4.6% to $1.89 at 21:42 GMT, according to CoinMarketCap.

The Canadian dollar was broadly steady against most major currencies on Monday following the release of inflation data that showed price growth remained unchanged.

Inflation in Canada was flat last month, while core inflation measures recorded a general slowdown, as faster food and some goods prices were offset by slower growth in services prices.

Data from Statistics Canada released on Monday showed headline inflation rose 2.2% year on year in November, matching the pace seen in October and coming in below the $2.3% median forecast in a Bloomberg survey of economists.

On a monthly basis, the consumer price index increased 0.1%, in line with expectations.

Following the data, government bonds rallied, pushing the benchmark two-year government bond yield down to 2.57% by 9:48 a.m. Ottawa time. At the same time, the Canadian dollar, or loonie, trimmed earlier gains against the US dollar.

The Bank of Canada’s preferred core inflation measures — known as the median and trim — slowed to an annual pace of 2.8%, down from 3.0% previously. On a three-month moving average basis, these measures eased to 2.3% from 2.6% in October.

The central bank has recently placed less emphasis on these specific indicators, noting that a broader range of measures suggests underlying inflation is hovering around 2.5%.

Veronica Clark, an economist at Citi, told BNN Bloomberg Television that there are “some encouraging signs that core inflation is slowing,” while adding that rental costs are still showing “a degree of stickiness.”

Overall, underlying price pressures eased or stabilized in November. Excluding food and energy, prices rose 2.4% year on year, down from 2.7% in October. Inflation excluding gasoline increased 2.6% for the third consecutive month, while the central bank’s former core measure — CPI excluding eight volatile components and indirect taxes — remained steady at 2.9%.

Despite this, inflation pressures broadened, with the share of goods and services posting annual inflation above 3% rising to around 42% of the CPI basket, up from 34% previously.

Overall, the report shows headline inflation continuing to move toward the central bank’s 2% target, even as some core measures remain closer to 3%. The Bank of Canada is unlikely to be alarmed by lingering core pressures, given its view that slack persists in the Canadian economy amid the impact of US tariffs on key sectors, weighing on business investment and consumer spending.

The central bank held its policy rate unchanged at 2.25% last week and reiterated that borrowing costs are “at about the right level” to support growth while keeping inflation under control. Governor Tiff Macklem set a high bar for any policy shift, saying the bank would act only in the event of a “new shock or an accumulation of evidence” that would “materially change the outlook.”

Policymakers expect inflation to remain close to 2%, a level it has hovered around for more than a year.

Charles St-Arnaud, chief economist at Servus Credit Union, said in an email that there are still “some signs that core inflation remains sticky, with momentum in certain measures staying elevated and inflationary pressures broadening.” He added that “there is nothing in today’s report that would cause immediate concern for the Bank of Canada or affect near-term monetary policy.”

Royce Mendes, managing director and head of macro strategy at Desjardins Securities, said in a note to investors that the data point to generally “benign price pressures.” He added that policymakers can take comfort that a stagflationary environment is not emerging, and that downside risks to growth and inflation are likely to become more significant in the months ahead.

Mendes noted that ongoing uncertainty surrounding the future of the US–Mexico–Canada Agreement is expected to weigh on economic activity, while fiscal stimulus is unlikely to play a major role until later in the year.

In November, lower prices for travel and accommodation, along with slower rent inflation, weighed on headline inflation. These effects were partly offset by higher grocery prices and a smaller decline in gasoline prices.

The drop in travel prices was partly driven by base effects, following Taylor Swift concerts held in Toronto in November 2024.

Food prices rose 4.7% in November, the largest increase since December 2023, driven by a surge in fresh fruit prices and continued strength in beef and coffee prices.

Price growth accelerated in five provinces, led by New Brunswick.

This report marks the first of two inflation releases ahead of the Bank of Canada’s next policy decision on January 28. Traders expect the central bank to keep rates unchanged until at least October 2026, with a rate hike priced in around that time.

In currency markets, the Canadian dollar was steady against the US dollar at $0.7263 as of 21:35 GMT.

Australian dollar

The Australian dollar fell 0.2% against the US dollar to $0.664 at 21:35 GMT.

US dollar

The US dollar index slipped 0.1% to 98.3 by 20:57 GMT, after touching a high of 98.4 and a low of 98.1.

Investors are awaiting the release of US nonfarm payrolls data for November on Tuesday, including the delayed October reading.

US consumer inflation data is also due later this week, which is expected to play a key role in shaping Federal Reserve policy expectations.

New York Fed President John Williams said on Monday that last week’s US rate cut has placed monetary policy in a good position to navigate the period ahead, adding that he expects inflation to ease as the labor market cools.

He emphasized that returning inflation to the 2% target is “critically important,” provided it does not create undue risks for the labor market.

Copper prices rose on Monday, supported by a weaker US dollar, which helped the market temporarily look past weak data and ongoing concerns surrounding China’s property sector, the world’s largest consumer of metals.

The benchmark three-month copper contract on the London Metal Exchange (LME) climbed 1.4% to $11,678 per metric ton by 17:03 GMT.

Copper had hit a record high of $11,952 per ton on Friday, driven by fears of tight supply, before coming under selling pressure as concerns resurfaced over a potential artificial intelligence bubble.

Alastair Munro, head of metals strategy at Marex, said prices are likely to remain volatile and range-bound through the end of the year and into the first quarter.

One trader noted that short positions on the LME are being reduced or rolled ahead of Wednesday’s settlement. The trader added that around 39% of the 165,875 tons of copper held in LME-registered warehouses has been classified as available for delivery.

At the same time, daily inflows into copper inventories on the Comex exchange, which have already reached record levels, continued to rise, driven by higher Comex prices. The United States excluded refined copper from the 50% import tariffs that took effect in August, although the metal remains under review.

Samuel Bazi, founder of risk management and trading firm Perfectly Hedged, said that as long as a large arbitrage gap exists between the LME and Comex, metal is likely to keep flowing into the US as traders seek to capture those profits.

In China, the world’s largest metals consumer, data showed industrial output growth slowed to a 15-month low in November, while new home prices continued to decline.

Concerns over China’s property sector intensified after property developer Vanke made renewed efforts to secure bondholder support to meet upcoming domestic debt repayments.

Other metals on the London Metal Exchange

Aluminum edged up 0.1% to $2,870 per ton.

Zinc fell 1.0% to $3,092.50 per ton.

Tin slipped 0.8% to $40,860 per ton.

Nickel dropped 1.9% to $14,310 per ton.

Lead declined 1.2% to $1,942.50 per ton, after touching $1,939, its lowest level since May.