USD/JPY continued its downward trajectory in Asian trading on Wednesday, as broad US Dollar softness and a recent sell-off in US Treasury yields weighed heavily on the major. The currency pair, which looks poised to test the 153.00 level, has been significantly affected by multiple economic factors and geopolitical tensions. With traders betting on the Federal Reserve cutting interest rates, a weaker USD further supports the pair's decline.
The disappointing performance of China's Caixin Services PMI also exerts negative pressure on USD/JPY. Despite a stronger Chinese Yuan fix, the market's focus remains on the policy divergence between the Reserve Bank of Australia and the Federal Reserve, as well as lingering US-China trade war fears. Additionally, growth in Japanese real wages during December has bolstered bets on a potential rate hike by the Bank of Japan, underpinning the Japanese Yen.
President Donald Trump's decision to delay the 25% tariffs on Canada and Mexico by one month, following conversations with his counterparts on Monday, adds an extra layer of complexity to the market's dynamics. This delay underscores the ongoing uncertainty surrounding trade policies, which continues to influence global markets.
Gold prices reached a fresh all-time high on Wednesday, driven by concerns over the economic fallout from Trump's trade tariffs. The rising gold prices highlight investor anxiety and their search for safe-haven assets amid economic unpredictability.