- The Japanese Yen (JPY) rises after two days of losses
- Finance Minister Kato comments added support.
- The US Dollar (USD) falls versus its major peers
- USD falls after Powell’s speech
The US dollar Japanese yen (USD/JPY) exchange rate is falling after two days of gains. The pair rose 0.26% in the previous session, settling on Monday at 152.46. On Tuesday at 21:00 UTC, USD/JPY trades -0.43% at 151.80 and traded in a range of 151.61 to 152.61.
The Japanese yen is advancing, driven by safe-haven flows, as U.S.-China trade tensions resurged.
The US and China have both started charging additional port fees on ocean shipping firms, which transport everything from holiday toys to crude oil.
Beijing also announced other measures in tit for tat moves, undermining what had appeared to be a conciliatory tone from U.S. President Donald Trump at the weekend, which had helped to fuel optimism at the start of the week.
Last Friday, Trump had threatened 100% tariffs on Chinese imports; however, he had softened his tone over the weekend.
The yen was also benefiting from comments from Japanese Finance Minister Kato, who said the Japanese government will closely examine any disorderly moves in the foreign exchange market, hinting that the government may intervene in the currency markets to support the yen.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is falling 0.24% at 99.03, after gains yesterday.
The U.S. dollar is falling amid the ongoing U.S. government shutdown and after dovish comments from Federal Reserve chair Jerome Powell.
The U.S. government shutdown is entering a third week, and the longer it is maintained, the greater the chance of the US economy suffering, which could pull on the US dollar further.
Losses in the US dollar accelerated after dovish commentary from the Federal Reserve chair Jerome Powell, who supported the expectations that the Federal Reserve will cut interest rates by 25 basis points at the meeting later this month.
Fed chair Powell had warned that the US labour market is on a downward trajectory and that the Fed could stop shrinking its balance sheet and then quantitative tightening in the coming months.
The market is now pricing in a 97% chance for 25 basis point rate cut at the meeting on October 28/29.