Yen backs off five-month high on cautious BOJ tone
The Japanese yen dropped in Asian trade on Wednesday on track for the second straight loss against the dollar, moving away from five-month highs on profit-taking.
Recent bullish remarks from some Bank of Japan officials hurt the odds of a Japanese rate hike in March as markets now await more data.
The yen is also pressured by higher US 10-year treasury yields before a series of important US labor data.
The Price
The USD/JPY pair rose 0.25% today to 150.18 yen per dollar, with a session-low at 149.57.
The yen lost 0.2% on Tuesday against the dollar on profit-taking away from a five-month high at 148.09.
Cautious Remarks
Bank of Japan Governor Kazuo Ueda said on Wednesday that monetary policy divergence with other countries could increase instability especially at the forex market. He cautioned that mounting geopolitical tensions between countries could lead to a sudden change in capital inflows across borders.
BOJ Deputy Governor Shinichi Uchida said that the BOJ monetary policy doesn’t aim at manipulating the forex market or reducing the yen’s value, and he added that the BOJ will take US tariffs into account when reviewing economic outlook.
Uchida said there are no plans for a rate hike at each monetary policy meeting, and no preconceived view on the pace of future rate hikes, as such moves will depend on the economy and inflation.
Japanese Rates
Following the remarks, the odds of a Bank of Japan interest rate hike in March fell from 85% to 65%.
US Yields
US 10-year treasury yields rose 0.9% on Wednesday away from five-month lows at 4.108%, in turn underpinning the dollar.
It comes as investors assess the impact of US tariffs on Canada, Mexico, and China in regards to inflation in the US.
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at just 7%.
Wall Street tumbles 1.5% as trade wars erupt
US stock indices dropped on Tuesday as the trade wars between the US and other countries escalated.
US President Trump imposed 25% tariffs on Canada and Mexico, and an additional 10% tax on Chinese imports.
China retaliated with 15% tariffs on some US products, while Canada also imposed 25% tariffs on a variety of US imports.
On trading, Dow Jones fell 1.4% as of 15:34 GMT, or 592 points to 42,600 points, while S&P 500 shed 1.4%, or 83 points to 5765 points, as NASDAQ gave up 243 points to 18,106 points.
Oil expands losses to five-month low on global trade wars
Global oil prices fell in European trade on Tuesday on track for the third straight loss, plumbing five-month lows as trade wars erupted, potentially hurting global growth and subsequently fuel demand.
Prices are also pressured by the OPEC+ decision to enforce scheduled production hikes in April, which could lead to a global supply glut.
Now traders await initial data on US crude stocks later today from the American Petroleum Institute, expected to show a drawdown for the second straight week.
Prices
US crude fell 1.9% today to $67.05 a barrel, the lowest since November 18, with a session-high at $68.42.
Brent declined 1.85% to $70.15 a barrel, the lowest since October 1, with a session-high at $71.61.
On Monday, US crude lost 2.15%, while Brent gave up 2.2% on global trade concerns.
Trump’s Tariffs
Trump imposed 25% tariffs on Canada and Mexico, and a 10% additional tariff on Chinese products, damaging global sentiment.
China quickly responded by imposing 15% tariffs on some US imports, and will limit exports to 15 US companies.
OPEC+
OPEC+ decided on Monday to go ahead with a scheduled production hike amounting to 138 thousand bpd in April, the first such hike since 2022.
It was a surprising decision to the markets, and is likely linked to Donald Trump’s calls for a reduction in oil prices worldwide.
Bitcoin hovers near three-month low on massive Wall Street losses
Bitcoin tumbled on Tuesday for the second session on track for three-month lows, following massive losses on Wall Street.
It comes amid mounting global trade tensions due to reciprocal tariffs between the US and China, while US 25% tariffs on Mexico and Canada went into effect as well.
The Price
Bitcoin fell 4.3% at Bitstamp today to $82,450, with a session-high at $86,727.
On Monday, bitcoin tumbled 8.6%, resuming losses and recovering from three-month lows at $78,197.
Crypto Market Value
The market value of cryptocurrencies fell by $75 billion to a total of $2.825 trillion.
Wall Street
US stock indices expanded their massive losses on Monday amid uncertainty about US monetary policies, and mounting trade tensions.
Dow Jones slid 1.5% to two-month lows, while S&P 500 lost 1.75% to eight-week lows, as NASDAQ slid 2.2% to four-month lows, led by the tech sector.
Trump’s Tariffs
Trump imposed 25% tariffs on Canada and Mexico, and a 10% additional tariff on Chinese products, damaging global sentiment.
China quickly responded by imposing 15% tariffs on some US imports, and will limit exports to 15 US companies.