BUZZ-COMMENT- Yen gains as tech haven though rally muted

The yen gained support on Monday as a haven amid a decline in U.S. technology stocks, but the market remains primed for data and a Fed meeting this week to bolster the dollar-positive U.S. exceptionalism argument that has supported USD/JPY for months.

Technology has been a key driver behind U.S. equity outperformance, drawing foreign investment inflows based on the broader narrative of U.S. exceptionalism.

Although those inflows might slow due to emerging concerns about China potentially challenging U.S. tech dominance, the overall U.S. economy remains robust. Investors will look to this week’s data, including Q4 GDP, trade, December PCE, and jobless claims, to confirm this strength.

The ongoing resilience of the U.S. economy is one reason the Fed is expected to keep rates steady at 4.5% on Wednesday. A dovish tone from Fed Chair Jerome Powell may weigh on the dollar, although any decline is likely to be orderly if U.S. stocks react positively to the possibility of future rate cuts.

For yen traders, attention is on Japan’s inflation data this week, including the Dec. services PPI on Tuesday and January Tokyo CPI on Friday. Any upside surprises could prompt markets to bring forward expectations of the next Bank of Japan rate hike, potentially moving it up from December.

Until then, USD/JPY is content hovering above the daily cloud top at 153.88 and below the 55-day moving average at 154.96.

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