Yen extends losses amid positive trade developments

The Japanese yen declined in the Asian market on Monday against a basket of major and minor currencies, extending its losses for the third consecutive day against the US dollar. This comes amid positive global trade developments that have improved risk appetite in markets and reduced demand for safe-haven assets.

The Bank of Japan is scheduled to meet this week to discuss appropriate monetary policy in light of recent economic developments in the country, with the probability of a 25-basis-point interest rate hike currently below 20%.

The Price

• USD/JPY today: The dollar rose against the yen by 0.25% to ¥148.02, up from Friday’s closing price of ¥147.65, recording the lowest level during today’s session at ¥147.51.

• The yen lost 0.45% against the dollar at Friday’s settlement, marking a second consecutive daily loss, due to continued correction and profit-taking from a two-week high at ¥145.85.

• Last week, the yen gained 0.75% against the dollar, its first weekly gain in the past three weeks, amid political uncertainty in Japan following the ruling party’s defeat in the upper house elections.

Positive Trade Developments

During their meeting in Scotland on Sunday, US President Donald Trump and European Commission President Ursula von der Leyen announced a new trade deal that includes a 15% tariff on European Union goods — half the rate Trump had threatened to impose starting August 1.

Senior US and Chinese negotiators are scheduled to meet in Stockholm on Monday to discuss extending the trade truce and preventing sharp increases in tariffs.

Bank of Japan

• The Bank of Japan will hold its meeting on Wednesday and Thursday this week to discuss the appropriate monetary policy for the world's third-largest economy.

• The market currently prices in a roughly 20% chance of a 25-basis-point rate hike during this meeting.

• Bank of Japan Governor Kazuo Ueda previously stated: the economy and prices are facing strong downward pressures, and the Bank of Japan has limited room to support growth by cutting interest rates, with the short-term interest rate remaining at 0.5%.