The Japanese Yen (JPY), along with most other currencies is facing renewed downward pressure. This is mostly because of persistent trade friction, most notably between the US and China. The USD/JPY currency pair is currently the strongest trading pair, just below the mid-143.00s. It just managed to escape a three-day losing streak that had sent it to a five-month nadir. Among the major currencies, the USD/JPY is experiencing by far the sharpest comeback. This increase is due to the US Dollar (USD) strengthening and holding its strength, which boosts the currency pair.
As Japan’s central bank, the Bank of Japan (BoJ) has long worried about the influence these developments have had on Japan’s real economy. Indeed, as one senior BoJ official argued, US President Donald Trump’s tariff policies are the primary cause of current market turbulence. These backwards trade measures are upending the financial landscape. The BoJ is apparently keenly observing the ensuing market developments. They understand that these changes have global implications and would greatly benefit not just Japan, but economies across the world.
Amid the wider financial landscape, the Federal Reserve’s expected rate cuts have been propelling gold prices higher. Consequently, XAU/USD now finds itself trading well above the $3,200 threshold. The bottom line Investors are turning in droves to safe-haven assets. Rising fears from an intensifying US-China trade war are weighing heavily on sentiment.
AUD/USD pair has been keeping higher, luring bulls for the fifth day on Tuesday. The upbeat risk tone in the market is supporting the Australian dollar. Investors are on the lookout for any currencies that might benefit from the prospect of improved relations and economic recovery with north of the 38th parallel.
Right now, USD/JPY climbs some positive traction on Tuesday, but see why analysts are very careful. The bullish advance in the currency pair occurs against the backdrop of continued worries signs from cooling trade war with China. Market volatility intensifies amid turbulence in US equities and long-term interest rates. This unprecedented scenario is even more challenging to forecast for either currency.