- The Japanese Yen (JPY) is falling for a second day
- BoJ minutes showed a hawkish bias
- The US Dollar (USD) is rising against major peers
- Trump pushes for a diplomatic solution with Iran
The US dollar Japanese yen (USD/JPY) exchange rate is rising for a second straight day. The pair rose 0.16% in the previous session, settling on Tuesday at 158.70. On Wednesday at 21:00 UTC, USD/JPY trades 0.33% at 159.23 and traded in a range of 158.58 to 159.25.
The Japanese yen is weakening following the latest Bank of Japan meeting minutes.
While the Bank of Japan left interest rates unchanged, policymakers signalled that further rate hikes may still be needed. The minutes showed that the BoJ debated the need for additional tightening and called for greater vigilance over the impact of yen weakness on inflation, which they see increasingly feeding through as companies pass on higher import and labour costs.
The minutes underscored the central bank’s intention to continue policy normalisation, particularly as US tariffs and previous rate hikes have yet to become a major drag on the economy.
However, the Middle East conflict has complicated the policy outlook by intensifying oil price pressures and inflation risks.
The U.S. dollar is rising across the board. The U.S. Dollar Index, which measures the currency against a basket of major peers, is rising 0.18% to 99.61, extending gains for a second day.
.The US dollar is extending its gains against its major peers as investors remain focused on inflation expectations and sceptical of any near-term de-escalation in the Middle East.
President Trump said the US was making progress in talks with Iran; however, Tehran has denied that such negotiations have even taken place.
Forex markets are reading these conflicting signals more cautiously than equity and bond markets.
US equities are trading almost 1% higher, with the S&P 500 rising, while oil prices are down around 4% on the day.