- The Japanese Yen (JPY) is weakening
- Japanese Household spending falls for a third month
- The US Dollar (USD) is falling against major peers
- Trump is due to speak at 8pm ET
The US dollar Japanese yen (USD/JPY) exchange rate is inching higher on Tuesday after losses in the previous session. The pair fell -0.06% in the previous session, settling on Monday at 158.69. On Tuesday at 19:30 UTC, USD/JPY trades +0.02% at 159.72 and traded in a range of 159.47 to 160.03.
The Japanese yen is under pressure, hovering close to the 160 level, as investors weigh ongoing developments in the Middle East together with weak data from Japan.
Household spending in February fell 1.8% compared with a year earlier, which was much weaker than expectations for a 0.7% decline. It also marked a third consecutive monthly drop, as consumers cut spending on food items affected by rising prices.
This marks the longest declining streak since November 2024 and comes as higher oil prices stemming from the Iran war threaten to further reduce private consumption in Japan.
This is happening at a time when the Bank of Japan is considering when to next raise interest rates.
The U.S. dollar is rising versus the yen but falling versus its major peers. The U.S. Dollar Index, which measures the currency against a basket of major peers, is falling 0.20% to 99.79, extending losses for a second day.
Meanwhile, the U.S. dollar is falling against its major peers ahead of the 8:00 PM ET deadline that President Trump has given Iran to open the Strait of Hormuz.
Iran is reportedly showing few signs of accepting U.S. President Trump’s ultimatum. Trump has threatened to destroy Iran’s power plants and other key infrastructure if Tehran does not meet the deadline.
Most investors are sitting on the sidelines in the FX markets while U.S. stocks are falling sharply lower. Whether the ultimatum will result in a deal being agreed or a further escalation remains uncertain. Time will tell.