- The Japanese Yen (JPY) falls, adding to last week’s losses
- The yen fell on safe haven outflows after a US-China trade deal
- The US Dollar (USD) is rising against its major peers
- US growth outlook improves as trade tensions ease
The US dollar against the Japanese yen (USD/JPY) exchange rate is rising sharply higher, adding to last week’s gains, The pair rose 0.28% in the previous week, settling on Friday at 146.20. At 22:00 UTC, USD/JPY trades 2.11% higher at 148.42 and trades in a range of 145.70 to 148.65.
The Japanese yen pushes higher as the market mood improves and investors ditch the safe haven. News that the United States and China reached a deal to temporarily reduce reciprocal tariffs is a sign of a trade war between the world’s two largest economies.
The US agreed to reduce its tariffs imposed on Chinese imports to 30% from 145%. China agreed to reduce duties on US imports to 10% from 125%. These measures will be effective for 90 days and mark a serious de-escalation in trade tensions, also surpassing investor expectations. Many had expected several rounds of introductory talks with few, if any, real agreement.
The US Dollar is rising versus its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is 1.43% higher at 101.78 at the time of writing, after rising 0.31% last week.
The US dollar is being propelled higher by easing tensions between the US and China, which is helping to ease US recession fears. The market had grown fearful that Trump’s trade tariffs on the trade war with China could tip the US economy into recession.
The U.S. dollar rose last week on April optimism towards potential trade deals after the US announced an agreement with the UK.
Well, trade tariffs and trading developments will be the primary drivers for the FX markets on the US dollar. Attention will also be on US inflation data due tomorrow and Federal Reserve chair Jerome Powell’s speech on Thursday.