- The Japanese Yen (JPY) rises for a second day
- The economics ministers warn over FX levels
- The US Dollar (USD) falls versus major peers
- FOMC is expected to cut rates by 25 bps
The US dollar Japanese yen (USD/JPY) exchange rate is falling for a second straight session. The pair rose 0.24% in the previous session, settling on Monday at 152.70. On Tuesday at 18.30 UTC, USD/JPY trades -0.35% at 152.16 and traded in a range of 151.76 to 152.75.
The yen is rising on Tuesday, boosted by a meeting between President Trump and the new Prime Minister, Senae Takaichi, who announced several trade measures to promote cooperation. The two leaders strengthened their economic and strategic partnerships across multiple sectors and fronts. The two leaders also signed an agreement on a US-Japanese alliance and a framework to secure critical minerals and rare-earth supplies.
However, arguably the biggest move for the yen came from the Japanese economic minister, who emphasised the importance of FX movements reflecting economic fundamentals. This was seen as a warning intervention.
The Bank of Japan also meets this week and is widely expected to keep interest rates unchanged. Policymakers are likely to debate the conditions for resuming rate hikes as tariff-related risks cool.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is falling -0.1% at 98.68, marking the second day of losses.
The US dollar is falling amid an improving market mood with US stocks trading at record highs ahead of earnings from Magnificent 7 stocks this week, including Meta, Alphabet, and Microsoft tomorrow, and Apple and Amazon on Thursday.
Attention is also on the Federal Reserve interest rate decision tomorrow, where the central bank is widely expected to cut interest rates by 25 basis points to under 4%.
The market will be watching Federal Reserve Chair Jerome Powell’s press conference for clues on the likelihood of another 25-basis-point rate reduction in December. Given the ongoing US government shutdown, the Federal Reserve has very limited economic data upon which to base its decision.
