Japanese Yen strengthens further against a broadly weaker USD

• The Japanese Yen strengthens on Thursday in reaction to stronger PPI print from Japan. 
• Worries about Trump’s trade tariffs might hold back the JPY bulls from placing fresh bets.
• Reduced Fed rate bets could underpin the USD and should help limit losses for USD/JPY.

The Japanese Yen (JPY) builds on steady intraday ascent against its American counterpart, which, along with renewed US Dollar (USD) selling, drags the USD/JPY pair to sub-154.00 levels heading into the European session on Thursday. The stronger Producer Price Index (PPI) released from Japan earlier today reaffirms bets that the Bank of Japan (BoJ) will hike rates further and acts as a tailwind for the JPY. Furthermore, a fresh leg down in the US Treasury bond yields turns out to be another factor benefiting the lower-yielding JPY. 

That said, concerns about the implications of US President Donald Trump’s tariffs on steel and aluminum imports, and impending reciprocal tariffs act as a headwind for the JPY. Moreover, expectations that the Federal Reserve (Fed) would stick to its hawkish stance, bolstered by the hot US consumer inflation figures on Wednesday, should help limit deeper losses for the buck and the USD/JPY pair. This, in turn, warrants some caution before positioning for any meaningful USD/JPY decline from over a one-week high touched the previous day.