TOKYO – U.S. Dollar Hits Two-Week High Against Yen
The U.S. dollar climbed to a two-week high against the yen on Monday, marking the start of a busy week filled with global trade discussions and central bank meetings.
President Donald Trump is set to visit Japan on Monday, where he will engage in a summit with Prime Minister Sanae Takaichi the next day.
Following that, Trump is expected to meet with Chinese President Xi Jinping on Thursday. They will discuss the framework for a trade deal that both nations’ officials finalized on Sunday.
As Trump travels through Asia this week, it’s anticipated that the Federal Reserve will lower interest rates after releasing recent inflation data that suggests moderation.
“Looking ahead, we believe the dollar will likely remain strong in the near term,” noted Majbeen Zaman, who heads foreign exchange research at ANZ, during a podcast. “The Fed rate cuts seem to be fully anticipated for both the October and December meetings. So, I think if the Fed provides a cautious outlook, that will likely support the USD.”
The dollar appreciated by 0.2% against the yen, reaching 153.12 yen, its highest value since October 10. Meanwhile, the dollar index stayed relatively stable at 98.94.
The euro was steady at $1.1628 but climbed to a record high of 178.13 yen. The British pound rose slightly by 0.05% to $1.3316.
Both the Australian and New Zealand dollars increased alongside regional stock market gains. The Australian dollar rose by 0.3% to $0.6535, while the Kiwi rose 0.2% to $0.5761.
In the cryptocurrency realm, Bitcoin increased by 1.4% to $114,921.04, and Ethereum saw a rise of 2.5%, reaching $4,167.08.
U.S. Treasury Secretary Scott Bessent mentioned that trade discussions held during the Association of Southeast Asian Nations (ASEAN) summit in Kuala Lumpur helped eliminate the possibility of the U.S. implementing 100% tariffs on Chinese imports, which was set to start on November 1.
Bessent also suggested that China may postpone the implementation for a year while it evaluates its licensing system for rare earth minerals and magnets.
Trump and Xi are scheduled to meet on Thursday at the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea, to finalize trade terms.
Fed Rate Cuts Expected—Watch for Chairman’s Comments
The Federal Reserve is anticipated to reduce its current rate from 4% to 4.25% during Wednesday’s meeting, a move supported by recent inflation figures that were more subdued than expected.
Given that these interest rate changes are already reflected in asset prices, markets may react sensitively to any positive remarks from Fed Chair Jerome Powell, who is expected to indicate further rate cuts for the December meeting.
As for Japan, the central bank might deliberate on whether conditions are suitable to resume rate hikes this week, especially considering the easing fears of a recession triggered by tariffs.
The majority of analysts predict that the Bank of Japan will keep interest rates steady at 0.5% during its meeting on October 29-30. Prime Minister Takaichi is advocating for the Bank’s collaboration in fostering inflation more influenced by wage increases.
