The Japanese yen declined in Asian trading on Thursday against a basket of major and minor currencies, deepening its losses for the fourth consecutive session versus the US dollar and hitting its lowest level in two weeks, amid strong demand for the greenback as the preferred investment option, especially after US inflation data strengthened expectations for additional Federal Reserve rate hikes this year.

This comes as US President Donald Trump and Chinese leader Xi Jinping begin their summit in the first official visit by a US president to China in nearly a decade, with markets closely watching discussions on strengthening trade ties between the world’s two largest economies, alongside complex geopolitical issues including the Iran war, the future of navigation through the Strait of Hormuz, and the impact on global energy markets.

Price Overview

• Japanese yen exchange rate today: The dollar rose against the yen by 0.1% to (157.99¥), the highest level since April 30, from today’s opening price at (157.85¥), and recorded a session low at (157.69¥).

• The yen ended Wednesday’s trading down 0.15% against the dollar, marking its third consecutive daily loss, after strong US producer price data.

US Dollar

The dollar index rose 0.1% on Thursday, maintaining gains for the fourth straight session and reflecting continued strength in the US currency against a basket of global currencies.

The dollar received additional support from rising US Treasury yields, as investors bet that the Federal Reserve will raise interest rates at least once this year.

Data released this week in the United States showed consumer prices in April rose at the fastest pace in three years, while producer prices recorded their strongest increase in four years, highlighting renewed inflationary pressures facing Federal Reserve policymakers.

According to the CME Group’s FedWatch tool, markets are now pricing in a 31.8% probability of a Federal Reserve rate hike in December, compared to just above 16% a week ago.

Trump-Xi Meeting

Global attention is focused on Beijing, where the historic meeting between US President Donald Trump and Chinese President Xi Jinping is taking place, amid Washington’s efforts to secure economic gains and preserve the fragile trade truce between the world’s two largest economies, while also discussing complex geopolitical issues, most notably the US-Israeli war against Iran and its regional and global implications.

Trump is expected to seek China’s help in pressuring Iran toward a peace agreement in the Middle East, though analysts believe he is unlikely to receive the level of support he wants.

Government Support

Kyodo News reported on Thursday that the Japanese government is considering preparing a supplementary budget to ease the burden on households from rising fuel costs, a move that could further pressure the country’s public finances.

According to unnamed government sources cited by Kyodo, the supplementary budget for the current fiscal year would support households expected to be affected by higher gasoline and utility bills during the peak summer season.

Japanese Interest Rates

• The summary of opinions from the Bank of Japan released on Tuesday showed a clear bias toward monetary tightening and preparations for an early interest rate hike, driven by rising inflation risks linked to the Middle East crisis and the Iran war.

• With oil prices continuing to rise, markets increased pricing for a quarter-point rate hike by the Bank of Japan at its June meeting from 55% to 60%.

• To further reprice those expectations, investors are awaiting additional data on inflation, unemployment, and wage growth in Japan.

The S&P 500 and Nasdaq Composite posted gains on Wednesday, supported by a rally in AI-related technology shares, helping markets look past stronger-than-expected inflation data and rising expectations that the Federal Reserve will maintain tight monetary policy for a longer period.

The semiconductor sector rebounded after Tuesday’s decline, pushing both indexes to fresh record closing highs. Six of the so-called “Magnificent Seven” AI-linked companies also advanced between 1.4% and 3.9%.

Ryan Detrick, chief market strategist at Carson Group, said that “technology showed clear resilience despite persistently elevated inflation data,” noting that chip stocks regained strength following temporary weakness in the previous session.

Data from the US Labor Department showed producer prices rose 1.4% last month, marking the largest increase in four years, driven by disruptions in oil supplies following the closure of the Strait of Hormuz. The figures suggested that rising energy costs are beginning to spread into broader areas of the economy, reinforcing concerns over widening inflation pressures.

In light of the data, hopes for near-term Federal Reserve rate cuts faded further. Boston Fed President Susan Collins even said that additional rate hikes could be considered if inflationary pressures persist.

On the monetary policy front, the US Senate confirmed Kevin Warsh as the new Federal Reserve chairman in a party-line vote.

Jim Baird, chief investment officer at Plante Moran Financial Advisors, said the producer price report “strengthens the inflation risk narrative and supports the case for keeping interest rates elevated for longer.”

Trump, Musk, Huang, and Xi in Beijing

US President Donald Trump arrived in Beijing accompanied by Nvidia CEO Jensen Huang and billionaire Elon Musk ahead of a two-day summit with Chinese President Xi Jinping.

Shares of Nvidia and Tesla rose 2.3% and 2.7% respectively, amid expectations that the talks could pave the way for new trade agreements and easing tensions.

The summit comes at a time of heightened US-China tensions tied to Taiwan and semiconductor restrictions, while Trump seeks to strengthen his political standing amid the impact of the Iran war and rising energy prices.

The Dow Jones Industrial Average closed lower, while the S&P 500 and Nasdaq advanced, with communication services and technology leading gains across the market.

Morgan Stanley also raised its target for the S&P 500 to 8,000 points, citing continued strength in corporate earnings.

Several individual stocks saw strong moves, with Ford shares surging 13.2% and Nebius climbing 15.7%, while crypto-related stocks Coinbase and Strategy declined due to weakness in Bitcoin and Ethereum.

Overall, advancing stocks outpaced decliners in a session marked by broad divergence within the market despite the major indexes closing at record highs.

US President Donald Trump and Chinese President Xi Jinping are set to open a closely watched summit in Beijing as Washington and Beijing seek to stabilize a fragile economic truce while maneuvering around issues related to Iran, Taiwan, and control over critical supply chains.

Trump, who last visited China in 2017, is scheduled to arrive on May 13 and hold a series of meetings and public events with Xi on May 14 and 15. The visit marks the first direct meeting between the two leaders in more than six months, in an effort to restore some stability to relations strained by tariffs, export restrictions on critical minerals, and broader geopolitical disputes.

Although the summit is expected to cover a wide range of economic and geopolitical issues — from US soybean exports to China’s relationship with Russia — the Iran war will also be on the agenda, according to senior US officials who briefed reporters on May 10.

One official said that “President Trump has spoken several times with President Xi Jinping about Iran,” adding that Trump expects to “apply pressure” on Beijing, which relies on discounted Iranian oil as part of their mutually beneficial relationship, in order to help secure an agreement to end the war that has now entered its third month.

While the fallout from the Iran war, including the closure of the Strait of Hormuz, will overshadow the summit, US officials and analysts believe trade tensions will remain the central focus when Trump and Xi meet at the Great Hall of the People.

Alicia Garcia Herrero, chief economist for Asia-Pacific at French investment bank Natixis, said: “President Xi wants to reduce US support for Taiwan, particularly by pushing to delay or limit American arms sales.” She added that Beijing is also seeking relief from US export restrictions on advanced technology and protection for its role in global supply chains.

Seeking a trade truce

The two sides are also expected to sign a series of agreements involving purchases of agricultural products such as soybeans and Boeing aircraft, alongside discussions on creating new frameworks to facilitate bilateral trade and investment.

The Trump administration imposed steep tariffs on China at the start of 2024 following the beginning of Trump’s second term, but trade tensions later eased after the US Supreme Court limited some tariffs and ruled others unlawful over recent months. Trump and Xi also reached an agreement in South Korea in October 2025 that reduced tensions by easing some export restrictions, including shipments of rare earth minerals to the United States.

Analysts believe Beijing will attempt to leverage its dominance over critical minerals and rare earth supplies — a group of 17 elements essential for everything from smartphones to fighter jets — to strengthen its negotiating position.

Michael Clarke, a China policy expert at the Center for American Progress in Washington, said the United States “has realized that China possesses tools it can use whenever it chooses because it dominates the mining and processing of rare earths and critical minerals needed for nearly everything.”

China accounts for more than 70% of global rare earth mining, 90% of processing and separation operations, and 93% of related magnet manufacturing.

In October 2025, China unveiled a legal framework allowing it to block exports of rare earths and dual-use components to any country, reinforcing restrictions it had already imposed months earlier on seven strategic rare metals important to defense industries.

In return, the Trump-Xi meeting in South Korea suspended some of those restrictions in exchange for easing certain US tariffs and resuming Chinese imports of American soybeans.

Rana Mitter, professor of US-Asia relations at Harvard University, said: “Both sides understand they possess tools capable of inflicting serious damage on the other,” adding that this is one reason the current trade truce has continued and is expected to remain in place at least until October, and possibly longer if Washington chooses to extend it.

Iran war casts shadow over summit

Although trade negotiations and official ceremonies will dominate the headlines, the Iran war will weigh heavily on the summit.

Just one week before Trump’s arrival in Beijing, China highlighted its close ties with Tehran by hosting the Iranian foreign minister.

The US Treasury Department also recently imposed sanctions on five private Chinese refineries, including one of the country’s largest, over processing Iranian crude oil. Beijing responded with an unusually public challenge, urging companies to ignore US sanctions, although financial regulators quietly advised major state-owned banks to suspend new loans to blacklisted refineries.

The US State Department additionally sanctioned four Chinese entities on May 8, accusing them of “providing satellite imagery that assisted Iranian military strikes against US forces in the Middle East,” accusations strongly rejected by China’s foreign ministry.

China and the United States share a strategic and economic interest in reopening the Strait of Hormuz, which handled one-fifth of global oil and gas flows before the war. However, analysts say the key question is whether Beijing is willing to pressure Tehran — and what it would demand from Washington in return.

“China will not help Trump reopen the Strait of Hormuz unless it receives something of very significant value,” Clarke said, suggesting that such concessions could include easing US restrictions on advanced technology exports such as AI chips, semiconductor manufacturing equipment, and jet engines.

What about Taiwan?

Taiwan is also expected to be a major issue where Beijing seeks concessions.

China considers Taiwan part of its territory and has pledged to eventually bring it under its control, by force if necessary. Beijing remains deeply concerned about US arms sales to the self-governed island and may push the Trump administration to formally oppose Taiwanese independence.

Washington approved a record $11.1 billion arms package for Taiwan in December and is reportedly preparing another package that could exceed $14 billion, although reports suggest notification to Congress has been delayed to avoid disrupting the summit.

Trump told reporters on May 11 that arms sales to Taiwan would be among the issues discussed with Xi.

In recent years, Beijing has intensified its “gray-zone” pressure campaign against Taiwan through blockade simulation drills, cyberattacks, and increasingly aggressive information warfare operations.

“China wants to make clear during the summit that it sees US support for Taiwan as a core issue,” Mitter said, adding that changing Washington’s stance on Taiwan may be a more important and explicit objective than discussions surrounding Iran.

Nuclear weapons, artificial intelligence, and Russia

The summit agenda also includes artificial intelligence, nuclear weapons, and China’s support for Russia during the war in Ukraine.

However, it remains unclear how deeply these issues will be discussed during the meetings.

Beijing has shown reluctance to engage in broad nuclear weapons talks and may seek to avoid substantive discussions on the matter. The Trump administration has also said it intends to raise concerns over Chinese financial support for Russia and establish a “communication channel” to avoid conflicts related to advanced AI models.

Garcia Herrero said: “The summit may produce a short-term truce that temporarily stabilizes markets, but it is unlikely to resolve the deep structural rivalry between the two powers in technology, supply chains, and security.”

The US S&P 500 index moved further away from its record highs on Wednesday after stronger-than-expected producer price data reinforced investor expectations that the Federal Reserve will maintain a restrictive monetary policy throughout the year.

Data showed that US producer prices rose more than expected in April, marking the biggest increase since early 2022, in the latest sign of accelerating inflation amid the fallout from the war with Iran.

The report came just one day after US consumer inflation recorded its largest increase in three years during April, pushing both the S&P 500 and Nasdaq indexes away from their record highs.

“These numbers are a major inflation challenge and simply mean that Kevin Warsh is not moving toward rate cuts anytime soon — and possibly not for the rest of the year,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

Traders are now expecting the Federal Reserve to keep interest rates unchanged throughout the year, while the probability of a rate hike by December climbed to 34.3%, compared to around 15% just one week ago, according to CME Group’s FedWatch Tool.

Markets are also preparing for a more hawkish approach under Kevin Warsh after the US Senate confirmed his appointment to the Federal Reserve Board on Tuesday. He could officially assume the role of Fed chair as early as Wednesday, with Jerome Powell’s term ending on Friday.

Meanwhile, US President Donald Trump arrived in Beijing accompanied by a delegation that included Nvidia CEO Jensen Huang and billionaire Elon Musk, after pledging to urge Chinese President Xi Jinping to “open markets” to American companies during the two-day summit.

Trump had previously said ahead of the summit that he does not expect to ask Xi for help in resolving the conflict with Tehran.

Oil prices saw limited movement during the day after three consecutive sessions of gains, while investors awaited any new developments related to Iran.

Wall Street fears that a prolonged conflict could keep energy prices elevated, increasing inflationary pressures and complicating Federal Reserve monetary policy decisions.

By 9:45 a.m. Eastern Time, the Dow Jones Industrial Average fell 249.05 points, or 0.50%, to 49,511.51 points. The S&P 500 declined 13.91 points, or 0.19%, to 7,387.05 points, while the Nasdaq edged up 3.40 points, or 0.01%, to 26,091.60 points.

Nine out of the 11 major sectors within the S&P 500 traded in negative territory, with utilities leading losses after falling 1.6%.

Meanwhile, the selloff that hit semiconductor stocks during the previous session stabilized, with the Philadelphia Semiconductor Index rising 1.7%.

Among notable stocks, Nebius Group jumped 10% after the AI-focused cloud computing company reported quarterly revenue growth of nearly eightfold.

Earlier in the day, Morgan Stanley raised its year-end target for the S&P 500 to 8,000 points from 7,800, saying US equities still have room for further gains as companies continue delivering strong earnings.

On the trading front, declining stocks outnumbered advancing ones by a ratio of 2.39 to 1 on the New York Stock Exchange and by 1.89 to 1 on the Nasdaq.

The S&P 500 also recorded 11 new 52-week highs against 32 new lows, while the Nasdaq posted 55 new highs and 118 new lows.