Dollar Closes in on 150 JPY as Markets in China Remain Closed

The dollar flirted with the psychological threshold of 150 yen on Tuesday and remained broadly stable ahead of a key US inflation reading later in the day, while bitcoin hovered around $50,000 for the second day in a row. Trading was largely subdued early in Asia, with markets in China and Hong Kong still closed for the Lunar New Year holidays, and traders remained cautious ahead of Tuesday's release of consumer price data in the world's largest economy.

The dollar last bought 149.39 yen, edging closer to the closely watched 150 level, which analysts said would likely prompt additional jawboning from Japanese officials in an effort to support the currency. The yen, which has already fallen more than 5% against the dollar this year, is under continued pressure as investors reduce their expectations for the size and pace of the Federal Reserve's easing cycle. The yen bears are also encouraged by signs that the Bank of Japan will resist aggressive rate hikes, even if it exits negative interest rates this year, as markets expect.

"It is a bit of a yield story. Yields in the U.S. are around their highs for 2024, so that's certainly helped dollar/yen," said Tony Sycamore, a market analyst at IG.

"It's also being supported by carry. With volatility so low and... for 2024, the markets have been pretty happy to add risk to their portfolios, and the carry trade is certainly part of that, which supports dollar/yen because of the yield differential."

Elsewhere, the euro edged 0.03 per cent lower to $1.0768, while sterling fell 0.07 per cent to $1.2620.