- The Japanese Yen (JPY) rises after recent losses
- Japanese industrial production rises 0.5%
- The US Dollar (USD) falls against its major peers
- Us trades deal hopes raise Fed rate cut expectations
The US dollar against the Japanese yen (USD/JPY) exchange rate is falling on Monday, extending losses from last week. The pair fell -0.98% in the previous week, settling on Friday at 144.67. At 18:30 UTC, USD/JPY is 0.29% lower at 144.25 and in a range of 143.78 to 144.76.
The yen is rising, receiving support from Japan’s industrial production data, which increased 0.5% month-over-month in May, recovering from a 1.1% decline in the previous month. However, this was still below market expectations of 3.5% growth as US tariffs cloud the outlook.
Japan’s top trade negotiator, Akazawa, said he will continue working with the US to reach an agreement while also defending national interests. The automotive sector is a key part of trade negotiations; however, Trump has previously stated that he will refuse to discuss reducing auto tariffs. Looking ahead, attention will turn to Tanken’s large manufacturing data, which is expected to be moderate as tariff uncertainty weighs on sentiment.
The US dollar is falling across the board. The US dollar index, which measures the USD against a basket of peers, is falling by 0.49% to 97.94, adding to yesterday’s gains.
U.S. dollar is falling on Monday against its major peers, dropping to its lowest level since 2022 as market optimism over U.S. trade deals boosted expectations for earlier rate cuts from the Federal Reserve.
Last week, the White House signed a trade framework with China, whilst Canada has scrapped a digital services tax in order to restart stalled talks with the US ahead of the July 9th deadline.
Investors interpreted Federal Reserve Chair Jerome Powell’s testimony to the U.S. Congress last week as dovish, after he said that rate cuts were likely if Trump’s trade tariffs didn’t spike inflation over the summer.
Expectations for a 25 basis point rate cut by September have risen to 93.3% according to the CME fed watch tool up from around 83% a week earlier.
Whilst the US economic calendar is quiet today, there are several key releases this week, including the ISM manufacturing and services PMI, as well as the non-farm payroll on Thursday, which could provide further clues about the outlook for Fed rate cuts.
