President Trump has enacted significant changes in tariff policies, lifting the trade-weighted average tariff rate on all US imports by approximately 5.5-6.0 percentage points. With this increase, the average percentage of tariffs reflects one of the highest levels since the end of the Second World War. These changes in tariff will markedly shape worldwide markets. Keep an eye out for their impacts on key currency pairs such as AUD/USD and USD/JPY.
At the moment, the two are forming a consolidation pattern just above the 0.6300 level. At the same time, Trump’s reciprocal tariffs would hurt important Japanese exports, changing the political calculus inside Japan. However, a stronger-than-anticipated Tokyo Consumer Price Index (CPI) may prevent JPY losses from widening.
The USD/JPY currency pair has been one of the most active movers on Forex now, trading close to a four-week high, above the 151.00 level. This is supported primarily by a slight recovery in the US dollar (USD), a factor which has largely supported the EUR/USD recovery. The Bank of Japan (BoJ) is not only raising rates but leaving the door open for additional economic stimulus. This US decision has the potential to drastically shift global currency dynamics.
Expectations for more stimulus measures from China are lifting the Australian dollar (AUD). With trade tensions rising, the AUD/USD and USD/JPY are facing fruitful prospects. Rounding off these challenges is a global risk-off mood in markets. Investors are carefully traversing the uncertain terrain of moving tariffs and trade regulations.