Published by Global Banking & Finance Review®
Posted on November 18, 2025
4 min readLast updated: January 21, 2026
Add as preferred source on GoogleThe dollar holds gains against the yen amid Japan's fiscal policy concerns and US economic data. Investors await Fed's next move.
By Laura Matthews
(Reuters) -The dollar held modest gains against the yen after touching a fresh 9-1/2-month high on Tuesday, and edged up versus the euro as investors worried about Japan’s fiscal stance and awaited U.S. data for signals on the Federal Reserve’s next move.
Data from the Cleveland Fed showed that 39,000 Americans were given advance notice of layoffs last month, and a report from ADP Research showed that employers cut 2,500 jobs a week on average during the four weeks ending November 1.
This comes as investors remain concerned about a weakening U.S. economy, and expectations for interest-rate cuts recede.
"It’s been all about the missing data. I don’t envy the Fed at all. They’re stuck," said Michael Boutros, senior technical strategist at StoneX. "Looking at the market on paper, there is really no justification for a rate cut at this point."
DOLLAR INDEX EDGES HIGHER
The dollar index, a measure of the U.S. currency against major rivals, was last up 0.02% at 99.55, after snapping a four-day losing streak on Monday.
The yen weakened 0.2% to 155.58 per dollar. In New York trading, it hit 155.73, its lowest level since February 3.
While Bank of Japan Governor Kazuo Ueda has signalled the chance of raising interest rates as soon as next month, Prime Minister Sanae Takaichi has voiced displeasure over the idea and urged the BoJ to cooperate with government efforts to reflate the economy.
Barclays advised staying long on the U.S. dollar against the yen, saying Takaichi’s Abenomics-style policies are likely to keep pressure on the Japanese currency.
"Japan has added a tumultuous element because this new prime minister seems to be more aggressive and wants to do more spending," said Juan Perez, director of trading, Monex USA. "So, that takes away a safe-haven in the world of finance, which is Japan. Now they are a little bit more wild, they’re a little bit more volatile."
INTERVENTION RISK
Analysts also flagged a growing risk of foreign-exchange intervention, which could slow the dollar’s climb, though they noted that recent verbal warnings from authorities do not point to imminent action.
Japanese Finance Minister Satsuki Katayama on Tuesday expressed concern over recent foreign exchange movements.
Japan must compile a stimulus of around 23 trillion yen, Goushi Kataoka, a private-sector member of a key government panel, told Reuters on Monday.
The yield curve for Japanese government bonds steepened further on concerns about the size of Takaichi's stimulus package, with 20-year yields reaching a 26-year high.
Investors are looking towards the September U.S. jobs report expected on Thursday for clues on possible Fed action.
"Lately, you've been hearing comments that labor markets may be weaker than the data is showing. That’s what the market is trying to interpret," said Boutros. "The question is, does that supersede the persistent inflation that we’re seeing?"
Fed Governor Christopher Waller continued to build the case for further rate cuts amid a broad policy dispute at the U.S. central bank, while Fed Vice Chair Philip Jefferson said the U.S. central bank needs to "proceed slowly".
Richmond Fed President Thomas Barkin said on Tuesday he hopes the coming data and ongoing community interviews will help clarify where the economy is heading.
Money markets are pricing in the chance of a 25-bp rate cut next month at around 51%, according to the CME Group FedWatch tool, down from around 60% last week.
U.S. President Donald Trump on Tuesday said he was talking with potential replacements for Federal Reserve Chair Jerome Powell - whose term ends in May - and had some unexpected candidates.
The euro was down 0.07% at $1.1584, while the safe-haven Swiss franc was last trading at 0.7990 against the dollar.
In cryptocurrencies, bitcoin gained 1.50% to $93,178.93 while ethereum rose 4.7% to $3,148.57.
(Reporting by Laura Matthews in New York; Additional reporting by Stefano Rebaudo and Gregor Stuart Hunter; Editing by Alexandra Hudson, Nick Zieminski, Rod Nickel)
Foreign exchange refers to the global marketplace for trading national currencies against one another, determining exchange rates and facilitating international trade.
Monetary policy is the process by which a central bank manages the supply of money, often targeting interest rates to achieve macroeconomic objectives such as controlling inflation.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal amount over a specific period.
Economic growth is the increase in the production of goods and services in an economy over time, typically measured by the rise in Gross Domestic Product (GDP).
Financial markets are platforms where buyers and sellers engage in the trade of assets such as stocks, bonds, currencies, and derivatives.
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