In the foreign exchange market for the week that ended on January 12th, the dollar dominated other major currencies. Meanwhile, the market experienced nervous fluctuations in response to President-elect Donald Trump's potential tariff policies and strong U.S. economic indicators.

The USDJPY temporarily touched the upper 158 yen range. However, traders took profits after the release of the U.S. job figures and shifted to risk aversion. As a result, the dollar was subdued by the profit-taking momentum.

Meanwhile, the EURUSD and GBPUSD continued to show relatively moderate downtrends. The pound was sold off in response to the rise in U.K. bond yields and market uncertainty.

January 6 (Mon)

The USDJPY started the week trading in the lower 157 yen range. Later, the pair fell back to the lower 156 yen range as a media report that an aide to President-elect Donald Trump was considering imposing tariffs only on major imports weakened the dollar.

However, Trump's denial of the report fueled the dollar's rebound to the mid-157 yen range.

January 7 (Tue)

The Eurozone's all-items HICP (Harmonized Index of Consumer Prices) rose by 2.4% year-on-year in December, while the HICP core index rose by 2.7%. These predictable results pushed the EURUSD into a downtrend.

On the other hand, the USDJPY fell to the lower 157 yen range after Japanese Finance Minister Katsunobu Kato commented that his country would respond to excessive volatility in the currency market. However, the result of the U.S. December ISM Non-Manufacturing Index came in at 54.1, exceeding the forecast of 53.3, which fueled dollar buying and pushed the USDJPY back to the 158 yen level.

January 8 (Wed)

The USDJPY rose to the mid-158 yen range as the rise in U.S. long-term interest rates strengthened the dollar. However, the ADP National Employment Report registered an increase of 122,000 jobs in December, missing forecasts for a 140,000 increase. The weaker-than-expected result slowed the dollar's upward momentum. In addition, the FOMC minutes released the same day revealed no significant surprises.

January 9 (Thu)

With no major economic releases, the pause in the rise of U.S. long-term interest rates slightly weakened the dollar. Although the USDJPY fell to the mid-157 yen range, the pair fluctuated moderately throughout the day.

January 10 (Fri)

The U.S. Bureau of Labor Statistics reported the December employment figures. Total nonfarm payroll employment increased by 256,000, far exceeding the forecast of a 160,000 increase, and the unemployment rate registered a lower-than-expected 4.1%. The reaffirmed solidity of the U.S. labor market bolstered the dollar as the USDJPY surged to the upper 158 yen range.

However, as the Dow Jones Index temporarily plunged over 700 points, traders took a risk-averse stance, and the USDJPY pulled back.

Meanwhile, the EURUSD and GBPUSD continued to fall as a result of the U.S. job figures.

January 15 (Wed)

• 13:30 U.S: December Consumer Price Index（CPI）
• 13:30 U.S: December Consumer Price Index（CPI core index）

January 16 (Thu)

• 07:00 U.K.: November monthly gross domestic product (GDP, month-on-month data)
• 12:30 Europe: European Central Bank (ECB) Governing Council meeting minutes
• 13:30 U.S.: December retail sales

January 17 (Fri)

• 10:00 Europe: December Harmonised Index of Consumer Prices (revised HICP)
• 10:00 Europe: December Harmonised Index of Consumer Prices (revised HICP core index)

The following currency pair charts are analyzed using an overlay of the ±1 and ±2 standard deviation Bollinger Bands, with a period of 20 days.