Overview
- U.S. consumer prices rose 0.2% in January, with headline inflation at 2.4% year over year and the dollar finishing slightly lower on the day.
- The yen is set for its strongest weekly gain since early 2025, rising about 2.6%–3% after Prime Minister Sanae Takaichi’s election eased fiscal worries.
- Takaichi’s pledge that a food-sales tax cut would not require additional debt supported Japanese assets and encouraged unwinding of short yen positions.
- BOJ board member Naoki Tamura said Japan could judge its 2% inflation goal achieved this spring, lifting market odds for a potential rate hike.
- Swaps priced only about a 6%–10% chance of a 25 bp Fed cut in March as a firmer Chinese yuan at a multi‑year high added pressure on the dollar.