The Japanese yen fell further in Asian markets on Friday, extending losses for a third consecutive day against the US dollar and reaching its lowest level in four months. The currency dropped below the key psychological barrier of 150 yen per dollar, nearing its steepest weekly loss in 2025.

Japanese authorities expressed concern about recent forex movements, although Bank of Japan Governor Kazuo Ueda downplayed the direct impact of yen levels on inflation expectations.

Meanwhile, the US dollar continued to strengthen against a basket of global currencies ahead of the release of US nonfarm payrolls data, which may provide further clues about the likelihood of a Federal Reserve rate cut in September.

Price Overview

• USD/JPY rose 0.15% to ¥150.92 — the highest since March 28 — up from the session open at ¥150.72, after hitting an intraday low of ¥150.60.

• On Thursday, the yen dropped 0.85% against the dollar following stronger-than-expected US PCE inflation data.

• For July, the yen declined 4.8% against the dollar — its worst monthly performance in 2025, and the sharpest drop since December 2024 — amid easing demand for the currency as a safe haven, progress in US trade negotiations, and political uncertainty in Japan following the ruling party's Senate election defeat.

Weekly Performance

For the week ending today, the yen is down approximately 2.2% against the US dollar and is on track for its third weekly loss this month and its worst weekly drop in 2025 since early December 2024.

Bank of Japan

• As expected, the Bank of Japan on Thursday left its policy settings unchanged, maintaining interest rates at 0.50% — the highest since 2008 — for the fourth consecutive meeting.

• In its policy statement, the BoJ signaled it would consider a rate hike if economic and price conditions align with projections.

• The central bank raised its FY2025 core CPI forecast from 2.2% to 2.7%, adjusted FY2026 expectations from 1.8% to 1.7%, and lifted its FY2027 projection from 1.9% to 2.0%.

• Governor Ueda said the recent US–Japan trade agreement was a "significant step forward" in reducing uncertainty and supporting economic stability.

• Market pricing reflects a 50% probability that the BoJ will raise rates by 25 basis points in its September meeting. Investors await further inflation, employment, and wage data from Japan to reassess the outlook.

Japanese Authorities

Finance Minister Katsunobu Kato reiterated concerns over recent forex volatility, particularly after the yen hit a 4-month low. In a Friday press conference, he emphasized the importance of stable exchange rates reflecting fundamentals and warned of speculative-driven movements.

Governor Ueda echoed this sentiment on Thursday, saying that current exchange rate levels are unlikely to have a significant direct impact on inflation projections.

US Dollar

The US Dollar Index rose 0.1% on Friday to 100.15, marking its seventh straight gain and the highest level in two months, reflecting continued strength in the greenback against major currencies.

This rally comes amid fading recession fears in the US, bolstered by recent trade agreements with Japan and the EU, and diminishing expectations for a September rate cut as strong economic data and a hawkish Fed weigh on market sentiment.

Investors are now focused on July’s US jobs report due later today, a key metric for the Fed’s upcoming policy decisions.

Economies.com Outlook

• We at Economies.com expect the yen to remain under pressure against the US dollar, particularly if the upcoming US jobs data exceeds market expectations.

Most major cryptocurrencies declined on Thursday amid weakening risk appetite in financial markets, as the deadline set by President Donald Trump to finalize new trade agreements draws near.

US government data revealed that the core Personal Consumption Expenditures (PCE) price index — the Federal Reserve’s preferred inflation gauge — remained stable at 2.8% year-over-year in June.

Additional data showed that the US Employment Cost Index rose by 0.9% in the second quarter, surpassing expectations of a 0.8% increase.

Meanwhile, initial jobless claims rose by only 1,000 to 218,000 in the week ending July 26, compared to an unrevised 217,000 the previous week. Analysts had expected a rise to 222,000.

Investors are now awaiting Friday’s nonfarm payrolls report for further clarity on the Federal Reserve’s monetary policy outlook.

The market is also closely monitoring the August 1 deadline set by President Trump to conclude trade negotiations before new tariffs are imposed.

Earlier today, President Trump announced an agreement with Mexican President Claudia Sheinbaum to extend the trade negotiation deadline by an additional 90 days, citing the complexity of ongoing discussions between the two countries.

On Wednesday, Trump issued a series of tariff-related decisions targeting copper imports and goods from Brazil and South Korea, just ahead of the August 1 deadline for raising US tariffs.

Ethereum

As of 21:08 GMT on CoinMarketCap, Ethereum (ETH) was down 1.3% at $3,725.8.

Aluminum continues to perform strongly despite global economic shifts and regional extraction and refining challenges.

On July 25, aluminum prices on the London Metal Exchange climbed to a four-month high, closing the week at $2,656.5 and $2,657 per ton—an increase of $10.5 or 0.39%. According to reports, this rise was mainly driven by renewed optimism about Chinese demand, along with mounting pressure from global supply constraints.

On the same day, the three-month bid/ask prices rose by $7.5 per ton or 0.28%, reaching $2,655.5 and $2,656 per ton, respectively. In the following week, spot aluminum prices were recorded at $2,635.85 per metric ton, a slight pullback from the recent peak. Nonetheless, prices remain relatively elevated due to a combination of supply constraints and renewed demand from infrastructure projects in major economies.

Key Drivers of Price Movements

According to market observers, the current rally in aluminum prices is attributed to several factors, led by China’s production cap policies. Although China is the world’s largest aluminum producer, it is nearing its annual ceiling of 45 million metric tons—a policy aimed at curbing carbon emissions. This has led to expectations of reduced output in the second half of the year.

Rising demand from fast-growing sectors such as electric vehicles and renewable energy is also a key stabilizing force. Meanwhile, the European Union is ramping up investments in defense manufacturing, boosting demand for industrial metals like aluminum. Continued sanctions on Russia, a major aluminum exporter, have further constrained supply to European markets.

Other contributing factors include:

- Rising energy costs, as aluminum smelting is highly electricity-intensive.

- Trade disruptions, including escalating tariffs that are reshaping global aluminum flows.

- Supply chain volatility and increased demand from infrastructure projects.

Impact of Tariff Policies on Producers

In North America, tariff policies—especially under Section 232—continue to reshape the dynamics of the U.S. aluminum sector. Reports indicate that while domestic production remains strong, supply is increasingly supported by imports, particularly from Canada and Middle Eastern countries.

The industry was jolted in June when the U.S. doubled Section 232 tariffs to 50%, triggering major cost shifts and forcing producers to restructure supply strategies. Analysts note that producers have managed to adapt quickly despite the pressure.

For instance, Alcoa, one of the producers affected by the higher tariffs, has redirected Canadian exports to Europe and Asia while divesting non-core assets. Meanwhile, Rio Tinto, heavily reliant on Canadian exports to the U.S., incurred $321 million in tariff costs during the first half of the year. Approximately 723,000 tons of aluminum were exported to the U.S., significantly increasing cost burdens.

Outlook for the Aluminum Market

Industry leaders warn that prolonged trade tensions could dampen global aluminum consumption and curb sector growth. While some companies benefit from short-term regional supply shortages, many are preparing for deeper structural shifts should tariffs persist. Others are actively lobbying for exemptions.

Still, there are positive indicators supporting the market in the near term. Beijing has announced a ¥1.2 trillion hydroelectric dam project, signaling government intent to stimulate the economy through infrastructure investment. The project is expected to boost aluminum demand in construction, energy, and transportation sectors.

However, strict energy consumption policies in China—particularly in provinces like Yunnan and Inner Mongolia—have reduced output, further tightening global supply and increasing price volatility.

Amid these disruptions, India is emerging as a new growth market. With abundant bauxite reserves and an expanding downstream industry, India’s aluminum sector continues to gain momentum. Analysts forecast sharp increases in domestic demand over the coming years, driven by infrastructure development and rising activity in the transport sector.

US stock indices climbed during Thursday’s trading session following the release of key economic data and a rally in the tech sector driven by Microsoft’s earnings.

Government data showed that the core Personal Consumption Expenditures (PCE) price index — the Federal Reserve’s preferred inflation gauge — held steady at 2.8% year-on-year in June.

Another report revealed that the US Employment Cost Index rose by 0.9% in the second quarter, surpassing expectations of a 0.8% increase.

Meanwhile, initial jobless claims in the US rose by just 1,000 to 218,000 in the week ending July 26, up from the previous week’s unrevised reading of 217,000. Analysts had expected claims to rise to 222,000.

The Nasdaq and S&P 500 both hit new record highs after Microsoft and Meta Platforms reported strong revenue and earnings for the second quarter of 2025.

As of 16:24 GMT, the Dow Jones Industrial Average had fallen by 0.3% (156 points) to 44,305, while the broader S&P 500 rose by 0.2% (11 points) to 6,374, and the Nasdaq Composite climbed 0.5% (109 points) to 21,239.