Japan’s provisional trade data for January 2026 show exports of ¥9.19tn. That is up 16.8% year on year from ¥7.87tn in January 2025. It is the biggest rise since November 2022, when exports rose 20% year on year. Even so, USD/JPY was slightly lower and the yen barely moved.
Exports to Asia rose 25.8% year on year. China led with +32.0%, followed by Taiwan at +35.3%. Exports to Western Europe rose 25.5% year on year. Exports to the United States fell 5% year on year.
Yen Drivers In Early 2026
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.
Separately, a Japanese accounting group is proposing changes to how life insurers record unrealised losses on government bonds. Under the proposal, some bonds that match long-term policies could be treated as held to maturity. If conditions are met, this would avoid impairment accounting.
As of February 18, 2026, the yen outlook is mixed. January export growth was the strongest since November 2022, but the yen did not strengthen much. That suggests other forces are outweighing the positive trade data.
The main force holding back the yen is the interest rate gap. The U.S. Federal Reserve funds rate is around 3.25%, while the Bank of Japan policy rate is 0.10%. This makes it attractive to borrow in yen and invest in dollar assets. That carry trade keeps steady demand for dollars over yen.
Large capital outflows also matter. The newly announced $36bn investment into U.S. energy and mineral projects is a structural headwind for the yen. Converting yen into dollars for these projects could offset the support normally provided by stronger exports.
Implications For Yen Derivatives
The potential rule change for Japanese life insurers could offer some support for the yen. If accounting rules are eased, insurers may face less pressure to react to bond losses by shifting funds overseas in search of higher yields. This is a smaller factor, but it could reduce some of the yen selling seen through 2025.
For derivatives traders, this backdrop suggests limited yen upside even with strong fundamentals. One possible strategy is selling out-of-the-money yen call options (or USD/JPY puts) to collect premium. This trades the view that the wide rate differential and investment outflows will limit any major yen rally, keeping USD/JPY range-bound or drifting higher.
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