Japan Yen finds support amid China tensions and BOJ signals

The Japanese yen rebounded toward 157 per dollar on Thursday, snapping a two-session losing streak as investors reassessed geopolitical risks. Market sentiment was shaped by rising tensions between Japan and China after Beijing imposed export controls on military-use products destined for Japan. Domestic data remained a headwind, with real wages falling 2.8% in November as inflation continued to outpace pay growth, complicating the Bank of Japans tightening path. Still, Governor Kazuo Ueda reiterated earlier this week that the central bank would raise interest rates if economic and price trends align with forecasts. Meanwhile, the dollar strengthened broadly against major peers, with its gains most pronounced against the euro, as softer inflation signals in Europe weighed on the single currency and mixed US data offered limited clarity on the Federal Reserves outlook.

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