The USD/JPY pair rose to about 151.80 during early Asian trading on Wednesday, which triggered some selling activity. The US dollar (USD) is losing value against the Japanese yen (JPY), primarily due to escalating tensions in US-China trade and an ongoing risk-off sentiment. Later on Wednesday, several Federal Reserve officials, including Stephen Milan, Christopher Waller, and Jeff Schmidt, are set to speak.
According to a report from Reuters, the US and China have started imposing extra port fees on shipping companies that transport a range of goods from toys to crude oil. Additionally, US President Trump has indicated that he might impose tariffs as high as 100% on Chinese goods by November 1 or earlier, contingent on Beijing’s actions in the rare earth dispute.
Federal Reserve Chairman Jerome Powell mentioned that the central bank intends to further reduce interest rates by a quarter of a percentage point later this month, despite a government shutdown that is creating a gloomy economic outlook. He pointed out a sluggish hiring pace, which might further decelerate. Nevertheless, after Powell’s remarks, expectations for a rate cut in October remain relatively stable, with investors perceiving nearly a 100% likelihood of it, based on the CME FedWatch tool.
On another note, political uncertainty in Japan, particularly following Komeito’s exit from the ruling coalition, may pose challenges for the Bank of Japan (BOJ) in terms of raising interest rates and further weakening the yen. Etsuro Honda, an economic advisor to Sanae Takaichi, cautioned last week that the BOJ should proceed carefully with rate hikes, as the economy is still in a delicate state.
