Consequently, the Japanese yen (JPY) is on a roll, leading G10 currencies. Currently ranked fourth, the JPY is expected to finish 2025 as one of the strongest performers. Such optimism is welcome news, especially considering the current environment of worldwide trade wars and countries making calculated economic moves.
The JPY will probably not be a bargaining chip in the negotiations to come. Further complicating the situation, Japan’s Prime Minister, Shigeru Ishiba, has indicated that he is unwilling to make major concessions in a hurry for an early agreement. This position is a testament to Japan’s strong economic fundamentals, considering that it continues to hold a massive amount of U.S. treasuries.
President Donald Trump recently announced a delay in reciprocal tariffs affecting most countries, which may influence the dynamics of the impending talks. Nobody is exempt, Trump said, emphasizing his administration’s hardline approach to US trade partners.
Yet PM Ishiba’s statements to the Japanese Diet suggest a very cautious approach to the negotiations. He emphasized, “I am not of the view that we should make big concessions for the sake of wrapping up negotiations quickly.” Such a declaration would make clear that Japan is willing to participate in the long haul of negotiations without unduly sacrificing its essential interests.
The current strength of the U.S. dollar (USD) undermined the GBP/USD pair. Earlier in the day, the exchange rate broke through that key psychological level of 1.3200, setting a new multi-day high in the process. Falling U.S. yields have played a role in capping any major downside for GBP/USD.
With the ongoing U.S.-China trade war all around, market participants are on high alert. The European Central Bank (ECB) is set to make significant decisions that will keep traders occupied ahead of Good Friday. As of late September, gold has been bouncing around, with daily arguments over the $3,200 level and new all-time records nearing the $3,250 threshold.
The USD/JPY duo have already crossed their end-of-year 145 target. This wave only underscores the Japanese Yen’s spectacular run this year. Thus, analysts expect the yen to climb back up the G10 currency ranking.
“However, while there is scope for pullbacks in USD/JPY in the weeks ahead in favour of the USD, we remain optimistic about the ability of the JPY to regain pole position within the G10 universe this year. USD/JPY has sailed through our year-end target of 145 and we will be looking to revise this forecast in the coming weeks.” – Jane Foley, Rabobank’s FX analyst
The excitement around these trade discussions serves as a reminder of just how intertwined and interdependent global economies, and with them, currencies, have become. Japan and the U.S. are certainly in uncharted waters. Market observers will be watching how these economic policies are implemented as well as the ongoing negotiations on the macro level.