- The Japanese Yen (JPY) is rising on geopolitical worries
- South Korea unnerves the markets
- The US Dollar (USD) falls against its major peers
- The market prices in a 75% chance of a Fed rate cut
The US Dollar Japanese Yen (USD/JPY) exchange rate is falling for a third straight day on Tuesday. The pair fell 0.11% in the previous session, settling on Monday at 150.74. At 17:30 UTC USD/JPY trades -0.1% lower at 149.39 and is in a range of 148.64 to 150.24.
The Japanese yen is rising on safe-haven flows amid escalating geopolitical tensions in the region.
The South Korean Prime Minister has declared emergency martial law, shocking residents and the financial market. In reaction to the announcement, the Korean won traded 2% lower, falling to its weakest level since the pandemic in 2021.
News that China was also ramping up the tit-for-tat trade war with America added to the cautious market mood helping the safe haven yen higher. China announced that it will ban the export of certain rare earth minerals needed for electronic components such as semiconductors and EV batteries. The move comes in response to Trump’s threats over the weekend to apply 100% tariffs on BRIC members, including China, should they not support the USD as the reserve currency.
The US Dollar is falling across the board on Friday. The US Dollar Index, which measures the greenback against a basket of major currencies, is falling to 106.32 at the time of writing, down 0.12%, after rising 0.67% yesterday.
The USD is falling but has picked up from session lows on safe haven demand. However it remains under pressure amid rising expectations that the Federal Reserve will cut interest rates in the December meeting.
Fed speakers yesterday, including Governor Christopher Waller, said he was leaning towards a 25 basis point cut this month.
Looking ahead, the economic calendar ramps up across the week, with ISM services PMI, ADP payrolls, and non-farm payrolls due later in the week. These data points could influence the Fed’s outlook for interest rates.
