The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

Japanese investors raised their holdings in foreign stocks, driven by a benign U.S. core inflation report that fuelled expectations of Federal Reserve cuts and boosted global equities, while a strong yen also lifted domestic buying power.

The Japanese yen is slightly lower on Thursday. In the European session, USD/JPY is trading at 156.25, down 0.16% on the day.

Shares are mixed in Asia after U.S. stocks edged back from their all-time high, with many regional markets closed for lunar new year holidays

A weaker yen is typically good for Japanese exporters but could push inflation higher because the country imports much of its energy and food. The Bank of Japankicked off a global market selloff last time it raised interest rates. The likely rate increase this week will be less dramatic, but the real suspense lies in what comes next for the yen.

The gap could widen even further, and exacerbate pressure on the yen, if the Federal Reserve’s preferred ... and a lot of very public pushback from Japanese officials,” said Joe Capurso ...

The U.S. dollar weakened against the yen on Thursday, as softer-than-expected U.S. economic data and growing confidence for a Bank of Japan interest-rate hike sent it tumbling to a near one-month low against the Japanese currency.

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Japan's central bank has raised its key interest rate to about 0.5% from 0.25%, noting that inflation is holding at a desirable target level.

Japanese markets eked out modest gains despite the yen's rise amid speculation of a BoJ rate hike next week. The Nikkei average edged up by 0.33 percent to 38,572.60 while the broader Topix index settled marginally lower at 2,688.31.

Traders look to Trump’s speech for a fresh impetus ahead of the BoJ decision on Friday.

The uncertainty surrounding the impact of Trump's trade and immigration policies could support the JPY.