- The Japanese Yen (JPY) falls after recent gains
- BoJ’s Ueda cautioned over soft underlying inflation
- The US Dollar (USD) falls against its major peers
- Us ADP payrolls fall by -33k
The US dollar against the Japanese yen (USD/JPY) exchange rate is rising, snapping a three-day downtrend. The pair fell -0.42% in the previous session, settling on Friday at 143.44. At 18:30 UTC, USD/JPY is 0.15% higher at 144.25 and in a range of 143.33 to 144.25.
The yen is under pressure, as the Bank of Japan remains cautious on inflation, and as a trade deal with the US remains elusive.
At the central bank’s forum in Portugal hosted by the ECB this week, BoJ governor Ueda said the country’s underlying inflation was still somewhat below the central bank’s 2% target; however, headline inflation has been above the BoJ’s 2% target for over three years.
BoJ’s Ueda is also remaining cautious amid concerns over the impact of U.S. trade tariffs on the economy and prices. Trump warned that he could implement 35% tariffs on Japan. This could have a disinflationary impact on the Japanese economy, meaning Bank of Japan may have to push the rate hike further out.
The US dollar is rising against the yen but falling across the board. The US dollar index, which measures the USD against a basket of peers, is falling by 0.04% to 96.79, marking a third consecutive day of declines.
The USD is falling now, the market weighs up weak labour market data and the latest developments with Trump’s trade deals.
US ADP payrolls fell for the first time in over 2 years in June, dropping by 33,000, which was well below the 95,000 increase that economists had expected. The data comes after Federal Reserve chair Jerome Powell said yesterday said that a July rate cut wasn’t off the table.
Attention now turns to tomorrow’s nonfarm payroll report for further clues on the health of the US labour market. A significantly weaker-than-expected report may prompt the market to reprice Fed rate cut expectations for as soon as July.
Meanwhile, Trump has announced a trade deal with Vietnam, which lowers planned tariffs to 20% ahead of the July 9 deadline. This is significantly lower than the original 46% reciprocal tariff.
Finally, attention is also on Donald Trump’s massive tax cut and spending bill, which has returned to the House of Representatives after passing a vote in the Senate by 51 to 50.
