📰 U.S. Selling Pauses After Trump’s Speech, but Yen Selling Pressure from the “Takaichi Trade” Remains

📰 U.S. Selling Pauses After Trump’s Speech, but Yen Selling Pressure from the “Takaichi Trade” Remains

After President Trump’s speech, the market’s main theme of “U.S. selling” has temporarily calmed.
However, on the Japanese side, yen-selling pressure driven by expectations for the continuation of the Takaichi administration remains in place. As a result, USD/JPY continues to trade in a strongly political environment.

U.S. Selling Temporarily Subsides After Trump’s Speech

President Trump stated that:

• Military force will not be used regarding the Greenland issue

• The planned tariffs on eight European countries starting February 1 will be postponed

Following these remarks:

• “U.S. selling” (dollar selling, U.S. bond selling, U.S. equity selling) eased

• U.S. 10-year yields
  → peaked in the 4.30% range and have fallen back to around 4.25%

• U.S. equities rebounded sharply, and U.S. stock futures moved into positive territory

• The Dollar Index
  → recovered from around 98.25 to near 98.80

Overall, risk concerns have temporarily retreated.

Tokyo Market: Stocks Rise, Yen Weakens

In line with the decline in U.S. yields:

• Japanese long-term yields also fell
  → the 40-year JGB yield dropped from the 4.2% range to around 4.0%

• The Nikkei surged by more than 1,000 yen at one point

With risk appetite improving, the FX market reacted with yen weakness:

• USD/JPY rose from the low 158s into the upper 158s

• EUR/JPY recovered from below 185 to the mid-185s

🗳 The “Takaichi Trade” Remains in Place

Japan’s political situation will remain uncertain until the House of Representatives election on February 8, but:

• Expectations for the continuation of the Takaichi administration

• Speculation about aggressive fiscal policy

• Strong expectations that the Bank of Japan will keep policy unchanged at today’s and tomorrow’s meetings

Together create an environment where:

Fading rate-hike expectations + anticipation of fiscal expansion
→ Yen selling is likely to persist.

With Trump-related risks easing, the “Takaichi trade” is once again moving to the forefront.

💱 FX in Early London Trading

• EUR/USD: around 1.1690

• GBP/USD: around 1.3435

Price ranges today have been narrow:

After Trump’s speech, concerns over the Greenland issue eased, and FX markets have stabilized.

📊 Key U.S. Data Ahead

In the U.S., several important indicators that provide a comprehensive view of inflation, growth, and employment will be released:

• Initial Jobless Claims (Jan 11–Jan 17)

• Real GDP (final, Q3 2025)

• Personal Income & Personal Spending (November)

• PCE Price Index (November)

The main focus will be on:

• Whether the labor market remains resilient

• Whether the disinflation trend is being maintained

🧭 Summary

The market is now moving into a structure of:

Easing U.S. anxiety × Continuing Japanese political risk

USD/JPY is likely to remain highly politically driven,
falling on U.S. concerns and being supported by Japan-related factors,
creating a uniquely complex and headline-sensitive trading environment.