Japan’s housing starts for January 2025 decreased by 4.6% year-on-year, which is worse than the anticipated decline of 2.6% and lower than the previous month’s drop of 2.5%.

This release typically has a limited impact on the Japanese yen’s value.

As of the report, the USD/JPY exchange rate is approximately 149.75.

A sharper decline in Japan’s housing starts suggests that residential construction is slowing at a faster pace than predicted. A drop of this size may indicate growing caution among developers, possibly due to higher costs, weaker demand, or tighter financing conditions. With January’s decline exceeding both expectations and December’s reduction, the trend appears to be weakening rather than stabilising.

Historically, this data does not have an immediate or pronounced effect on the yen. However, when seen alongside other economic figures, it may help shape expectations for broader market conditions. If signs of a slowdown accumulate, investors could start reassessing their outlook for policy moves and financial stability.

At present, the yen remains relatively steady, with the dollar trading around 149.75 against it. Given that exchange rate movements often stem from multiple influences rather than a single report, this stability suggests that traders are prioritising other factors, such as interest rate expectations or global risk sentiment.

Looking ahead, keeping an eye on upcoming data releases and any policy signals will be essential. If weaker trends persist, speculation may intensify around any potential responses from policymakers. Meanwhile, fluctuations in US yields or broader currency trends could also shape short-term movements, even if domestic housing data remains a secondary concern for most participants.