- The Japanese Yen (JPY) rises for a fourth day
- Safe-haven flows boost the yen on US-China trade worries
- The US Dollar (USD) is falling against its major peers
- US ISM manufacturing PMI falls
The US dollar against the Japanese yen (USD/JPY) exchange rate is falling after gains last week. The pair rose 1.05% in the previous week, settling on Friday at 144.06. At 15:30 UTC, USD/JPY trades -0.78 % lower at 143.00 and trades in a range of 142.62 to 143.99.
The Japanese yen is rising, outperforming most of its G10 peers on safe-haven flows, amid fears of a reviving US-China trade war and escalating Russia-Ukraine tensions.
At the end of last week, U.S. Treasury Secretary Scott Bessent warned that U.S.-China trade talks had stalled, and Trump accused China of violating its trade deal. Today, China is pushing back against these accusations, highlighting the strained relationship between the world’s two largest economies.
Fears of a revival of the US-China trade war are driving safe-haven demand, with the yen, Swiss franc, and gold advancing.
Meanwhile, the yen is also supported by expectations that the Bank of Japan could hike interest rates again this year after data last week showed that inflation crept higher.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is -0.48% lower at 98.85 at the time of writing, after gains last week.
The US dollar is falling at the start of a busy week as Trump’s chaotic trade policies hurt confidence in US assets.
U.S. data also added pressure to the US dollar, with the ISM manufacturing index unexpectedly falling in May. The ISM manufacturing PMI fell to 48.5 in May, down from 48.7 in April. This March was the third straight month of contraction, as both growth and inflation remain uncertain amid the protectionist U.S. trade policies under Trump, causing businesses to restrain output and trim payrolls.
This was below economists’ expectations of 49.1, a mark to a six-month low for activity. The manufacturing economy continues to struggle and will likely do so until there is more certainty around tariffs.
Looking out across the week services. PMI data is due on Wednesday, and the US nonfarm payroll is due on Friday, which could show a weakening US labour market.
