President Donald Trump agreed to delay the imposition of 25% tariffs on Canada and Mexico for one month following discussions with his counterparts on Monday. This decision comes amid ongoing trade negotiations and aims to provide additional time for reaching a consensus. The announcement has significant implications for international trade dynamics and currency markets, influencing trading activities across the globe.
In the Asian trading session on Wednesday, the USD/JPY pair was trading 0.70% lower on the day, hovering around 153.25. The decline in the value of USD/JPY can be attributed to several factors, including broad US dollar softness and a recent sell-off in US Treasury yields. Furthermore, traders are betting on potential rate hikes by the Bank of Japan (BoJ), spurred by a notable growth in Japanese real wages in December, which has strengthened the Japanese Yen.
Japan's Economy Minister, Ryosei Akazawa, emphasized the government's commitment to tackling deflation.
"With an ambitious goal to boost minimum wages, the government is trying to eradicate deflationary mindset." – Ryosei Akazawa, Japan's Economy Minister
This policy direction supports the Yen, reinforcing its position against the dollar as markets anticipate future monetary policy adjustments.
Meanwhile, the Australian Dollar (AUD/USD) was trading near 0.6250 during Wednesday's Asian session. Market sentiment was affected by disappointing data from China's Caixin Services PMI, which led to a slump in the Chinese Yuan and weighed on the AUD/USD pair. The ongoing RBA-Fed policy divergence, coupled with persistent concerns over US-China trade tensions, contributed to downward pressure on the pair.
Gold prices remained strong early Wednesday, maintaining their position close to record highs near $2,850. The precious metal continues to benefit from economic uncertainties and investors' search for safe-haven assets amid fluctuating market conditions.