The Japanese Yen demonstrated notable strength as the USD/JPY fell below the 152.00 mark following Japan's preliminary GDP report for the fourth quarter. The report revealed that Japan's economy expanded by 0.7% quarter-on-quarter and a robust 2.8% year-on-year, surpassing market expectations. This data reinforced investor confidence in the likelihood of another Bank of Japan (BoJ) rate hike, further boosting the Japanese Yen.
The anticipation of a BoJ rate hike comes amid a series of potential monetary policy adjustments across the Asia-Pacific region. The Reserve Bank of Australia (RBA) is expected to announce a rate cut of 25 basis points on Tuesday, while the Reserve Bank of New Zealand (RBNZ) may consider a third consecutive 50 basis points rate cut. These anticipated changes have influenced currency movements, with the AUD/USD pair gaining traction and climbing above 0.6350 in the Asian session on Monday, supported by a weakening US dollar and the possibility of a Russia-US meeting.
In commodities, gold prices edged lower, nearing $2,880, as investors engaged in profit-taking. Despite this decline, fears of a global trade war could potentially limit further losses in the precious metal. The prospect of a trade war has been heightened by US President Donald Trump's advocacy for reciprocal tariffs, which could escalate into global economic tensions.
Additionally, inflation data from the UK, Canada, and Japan have drawn attention as market participants evaluate their implications on monetary policy decisions in these regions. The CPI data is crucial as it provides insights into inflation trends that could influence future interest rate decisions by central banks.