Key points:

• Japanese yen drifts lower
• Rates on hold later this month?
• Nonfarm payrolls to make some noise

Sorry, long yen traders, not today, it seems. A Bloomberg report said the Bank of Japan will likely stay put on interest rates when officials meet later this month.

🐉 Yen Bulls Meet the Buzzsaw

• The USD/JPY pair added some 100 pips Friday morning after a report by Bloomberg shattered long yen traders’ daily targets. The rate crossed ¥157.50.
• According to people familiar with the matter (yes, we know how that sounds), the Bank of Japan will likely sit on interest rates January 23, nuking hopes of another hike, following the December move.
• Traders were betting on tighter policy, but “rates on hold” means the yen keeps bleeding yield to the dollar’s higher interest rates. Someone say “carry trade?”

🏦 BoJ: Growth Up, Rates Still Frozen

• What’s more, Bloomberg noted, the Bank of Japan is expected to upgrade its growth forecast to above 0.7%, basically saying “the economy’s fine” while refusing to touch rates.
• That combo is toxic for the yen: stronger growth without higher yields keeps Japanese money flowing abroad into higher-paying currencies.
• This is why the dollar-yen keeps drifting higher — capital follows interest, not optimism.

⚠️ Widow Trade Meets US Payrolls

• Still, surprises aren’t out of the question. Betting against the Bank of Japan is called the “widow trade” for a reason — it’s famous for sudden policy curveballs that vaporize positions.
• Today’s US jobs report could add fuel to the dollar if hiring beats expectations, pushing the exchange rate toward the psychological ¥158.00 level.
• Forecasts range from 54,000 to 73,000 new jobs, which is wide enough to spark serious FX fireworks.

Source: Tradingview