Japan\u2019s provisional trade data for January 2026 show exports at \u00a59.19tn, up 16.8% year on year from \u00a57.87tn in January 2025. This was the biggest rise since November 2022, when exports increased 20% year on year, while USD\/JPY was slightly lower and the yen showed little response.<\/p>\n
Exports to Asia rose 25.8% year on year, led by China at +32.0% and Taiwan at +35.3%. Exports to Western Europe increased 25.5% year on year, while exports to the United States fell 5% year on year.<\/p>\n
Japan plans to invest up to $36bn in US oil, gas and critical mineral projects. This is described as the first tranche of a $550bn commitment under a trade agreement with President Trump.<\/p>\n
Separately, a Japanese accounting group is proposing changes to how life insurers record paper losses on government bonds. The proposal would allow some bonds matched to long-term policies to be treated as held to maturity, avoiding impairment accounting if conditions are met.<\/p>\n
Given the current date of February 18, 2026, we see a complex picture for the yen. Japan’s exports in January showed the strongest growth since November 2022, yet the currency barely strengthened. This tells us the market is weighing other, more powerful factors against the positive economic data.<\/p>\n
The primary force suppressing the yen is the interest rate differential. With the U.S. Federal Reserve funds rate holding around 3.25% and the Bank of Japan’s policy rate at just 0.10%, borrowing yen to invest in dollar-denominated assets remains highly attractive. This carry trade provides a constant underlying demand for dollars over yen.<\/p>\n
We must also factor in the large, planned outflows of Japanese capital. The recently announced $36 billion investment into U.S. energy and mineral projects creates a structural headwind for the yen. This flow of yen being sold to purchase dollars will likely offset the positive impact of strong export revenues.<\/p>\n
A potential rule change for Japanese life insurers might offer some support for the yen. Easing rules on how they account for government bond losses could reduce the pressure on them to sell yen and chase higher yields abroad. This is a subtle factor, but it could absorb some of the selling pressure we observed throughout 2025.<\/p>\n
For derivative traders, this environment suggests that the yen’s upside is capped despite strong economic fundamentals. Selling out-of-the-money call options on the yen (puts on USD\/JPY) could be a viable strategy to collect premium, betting that the interest rate gap and investment outflows will prevent any significant rally. This strategy positions for the range-bound or gradual weakening pattern we are currently observing.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Japan January exports surged 16.8%, Asia-led; US shipments fell. Tokyo pledged $36bn US energy, minerals investment.<\/p>\n","protected":false},"author":62,"featured_media":17051,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42185","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42185","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42185"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42185\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17051"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42185"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42185"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}