The Japanese yen declined in Asian trading on Friday against a basket of major and minor currencies, extending its losses for a second consecutive session against the US dollar and moving close to a three-week low, while heading toward a second straight weekly loss as investors continued favoring the US dollar as the preferred alternative safe-haven investment ahead of further developments in US-Iran peace talks.

Data released today in Tokyo showed Japanese core inflation slowing to its lowest level in more than four years, easing inflationary pressures on policymakers at the Bank of Japan and reducing expectations for a Japanese interest rate hike in June.

Price Overview

• Japanese yen exchange rate today: The dollar rose against the yen by around 0.15% to ¥159.13, from today’s opening level at ¥158.93, while recording a session low at ¥158.87.

• The yen ended Thursday’s trading down by less than 0.1% against the dollar, hitting its weakest level in three weeks at ¥159.34 after the release of strong US economic data.

Weekly Trading

During this week’s trading, which officially concludes with today’s settlement, the Japanese yen is currently down 0.25% against the US dollar, on track for a second consecutive weekly loss.

US Dollar

The US Dollar Index rose around 0.1% on Friday, maintaining gains for a second straight session near six-week highs, reflecting the continued positive performance of the US currency against a basket of global currencies.

In addition to support from the recent broad rise in long-term US Treasury yields, investors continue favoring the US dollar as a safe haven while closely monitoring developments in peace negotiations between the United States and Iran.

US-Iran Talks

• Iranian news agencies: The final version of the US-Iran agreement has been reached through Pakistani mediation, with an official announcement expected within the next few hours.

• US Secretary of State Marco Rubio said there are “good signs” regarding the possibility of reaching a peace agreement.

• Reports: Iran’s uranium stockpile and control over the Strait of Hormuz remain among the main points of disagreement between Washington and Tehran.

Core Inflation

Data released today in Tokyo showed Japan’s core consumer price index rising 1.4% year-on-year in April, the slowest pace since March 2022, below market expectations for a 1.7% increase, after a 1.8% rise in March.

These figures clearly indicate easing inflationary pressures on policymakers at the Bank of Japan, reducing the likelihood of Japanese interest rate hikes during this year.

Japanese Interest Rates

• Following the data above, pricing for the probability of the Bank of Japan raising interest rates by a quarter percentage point at its June meeting declined from 85% to 65%.

• Investors now await additional data on inflation, unemployment, and wage growth in Japan to reassess those expectations.

Oil prices pulled back from Thursday’s session highs as investor hopes grew that the United States and Iran could reach an agreement preventing a return to war.

US crude oil rose 16 cents to $98.42 per barrel by 1:30 p.m. Eastern Time, while global benchmark Brent crude fell 31 cents to $104.71 per barrel.

Prices had surged more than 3% earlier in the session after Reuters reported that Iran’s Supreme Leader Ayatollah Mojtaba Khamenei issued a directive ordering enriched uranium to remain inside Iran.

Markets viewed Khamenei’s position as a potential complication for negotiations with the United States, especially as US President Donald Trump has repeatedly stated that dismantling Iran’s nuclear program remains a primary objective of Washington’s war effort.

Trump said earlier this week that he canceled imminent airstrikes against Iran to give diplomacy more time, following requests from US allies in the Arabian Gulf region. Tehran and Washington have made little significant progress toward an agreement since reaching a fragile ceasefire last month.

Trump also warned on Wednesday that military operations could resume if Iran failed to provide “100% good answers” during negotiations, although he said he was willing to wait a few more days to allow talks to continue.

Speaking to reporters at Joint Base Andrews in Maryland, Trump said regarding potential US military action:

“We are fully prepared. We need the right answers, and they need to be 100% good answers.”

He added: “If I can prevent war by waiting a few days, and if I can save lives by waiting a little longer, I think that’s a great thing.”

Meanwhile, shipping traffic through the Strait of Hormuz continues facing severe disruptions due to Iran’s blockade of the waterway, which remains a vital route for global oil supplies.

The International Energy Agency warned on Thursday that the oil market could enter the “red zone” this summer if the Strait of Hormuz is not reopened. Executive Director Fatih Birol said global oil inventories are expected to decline as demand rises during the summer travel season.

Gold prices fell 1% on Thursday after rising oil prices fueled inflation concerns, strengthening bets on higher US interest rates and pushing Treasury yields and the dollar higher, adding further pressure on the precious metal.

Spot gold declined 1% to $4,500.07 per ounce. The yellow metal had risen more than 1% during Wednesday’s US trading session after hitting its lowest level since March 30.

US gold futures for June delivery also fell 0.7% to $4,502.90 per ounce.

Oil prices rose more than 2% following a Reuters report stating that Iran’s Supreme Leader issued a directive prohibiting the transfer of highly enriched uranium outside the country.

Giovanni Staunovo, analyst at UBS, said: “Fundamentally, everything still revolves around negotiations between Iran and the United States, and within that context we have seen some uncertainty regarding the possibility of reaching an agreement. However, oil prices are now placing increasing pressure on gold.”

The report added that directives from Ayatollah Mojtaba Khamenei could further frustrate US President Donald Trump and complicate talks aimed at ending the US-Israeli war against Iran.

Gold has lost more than 15% of its value since the outbreak of the war in late February, which disrupted shipping through the Strait of Hormuz, pushing energy prices sharply higher and intensifying inflation concerns.

The US dollar strengthened, making dollar-denominated gold more expensive for holders of other currencies, while US 10-year Treasury yields resumed their climb, increasing the opportunity cost of holding non-yielding bullion.

Staunovo added: “Higher oil prices, which push inflation upward, place pressure on central banks to keep interest rates elevated or even raise them further. Therefore, this remains a negative factor for gold in the near term.”

Although gold is traditionally viewed as a hedge against inflation, it tends to struggle during periods of rising interest rates.

According to the CME Group FedWatch tool, traders are now pricing in a 58% probability that the Federal Reserve will raise interest rates by at least 25 basis points this year, compared with a 48% probability just one day earlier.

Investors planning to buy shares in SpaceX through its initial public offering, which is approaching a $2 trillion valuation, are betting on CEO Elon Musk and his ability to transform the company’s growing satellite business into something much larger by using an as-yet unproven rocket system to support massive artificial intelligence ambitions.

Musk successfully transformed SpaceX into the world’s largest rocket company by launching thousands of Starlink internet satellites and pioneering reusable rocket technology that reshaped the economics of the space industry.

But the company is now seeking a valuation based not only on its current achievements, but also on the empire it could eventually become if Musk’s ambitious bets on Mars colonization, space-based data centers, and artificial intelligence leadership succeed.

At the center of these ambitions lies a chain-reaction thesis in which each stage unlocks the next phase of funding and expansion. Starlink is expected to generate the cash flow needed to fund the next-generation Starship rocket, while Starship would lower launch costs and expand the market, eventually supporting the company’s new artificial intelligence business, which continues consuming enormous amounts of capital.

Josh Gilbert, analyst at trading platform eToro, which plans to offer trading in the stock after listing, said: “The risk is not whether SpaceX is a real company, because it clearly is. The real risk is whether a $1.75 trillion valuation adequately reflects the execution challenges of a company that is partly a rocket business, partly an internet provider, and partly an artificial intelligence project — all driven by the vision of one person.”

SpaceX is already testing investor patience after revealing in its S-1 filing losses of $4.28 billion during the three months ending March 31, an eightfold increase compared with the same period last year.

Those losses alone are likely to push investors toward relying less on traditional financial metrics and more on belief in Musk’s ability to execute his promises.

Investor confidence in Musk

From building Tesla into an electric vehicle company worth more than $1 trillion and accelerating the global shift toward clean transportation, to leading SpaceX into becoming the first private company to transport astronauts for NASA, Musk has repeatedly transformed high-risk engineering bets into dominant businesses. That track record strengthened investor confidence that even his most ambitious assumptions for SpaceX could eventually become reality.

Greg Martin, co-founder of Rainmaker Securities, said during a video call: “You cannot justify a valuation between $1.75 trillion and $2 trillion for SpaceX using traditional financial metrics alone. Many investors believe SpaceX could eventually become a company worth between $5 trillion and $10 trillion.”

Musk’s projects frequently arrive behind schedule. Tesla’s Cybertruck, unveiled in 2019, did not begin deliveries until 2023, while the Roadster 2 announced in 2017 remains under development, alongside Tesla’s low-cost EV platform and Optimus robots. The robotaxi service expected to support near-term growth has also rolled out more slowly than earlier promises suggested.

Even so, investors, analysts, and fund managers interviewed by Reuters largely remain optimistic, with many believing the company’s satellite and space operations alone justify a valuation approaching $2 trillion.

Business risks

SpaceX would join a very small group of companies valued above $2 trillion, most of which generate stable revenue and strong profits.

In contrast, SpaceX’s accumulated deficit reached approximately $41.31 billion by March 31, reflecting years of spending that vastly exceeded revenues due to the cost of developing reusable rockets, the massive Starlink network, and giant artificial intelligence data centers.

Starlink remains the company’s financial backbone after generating $3.26 billion in revenue during the quarter ending in March, up nearly one-third year-on-year, although profit margins faced pressure from international expansion and other expenses.

SpaceX presented Starship not merely as a rocket, but as a core component of the company’s future, stating in the risk factors section of its filing:

“Our ability to execute our growth strategy depends heavily on Starship.”

The company warned that any delays in development or in achieving cost targets could disrupt deployment of next-generation satellites and artificial intelligence infrastructure, increase expenses, and weaken growth and customer retention.

It also stated that its currently operational Falcon 9 and Falcon Heavy rockets are incapable of deploying the company’s newest satellites.

Revenue from the space business declined 28.4% during the March quarter, while losses widened to $662 million from $70 million a year earlier as SpaceX poured massive investment into Starship development.

Meanwhile, losses in the artificial intelligence business jumped to $2.47 billion, while capital expenditures tripled to $7.72 billion, exceeding the combined capital spending of all other operations.

SpaceX summarized the challenge by stating:

“The complexity and interconnectedness of our engineering, manufacturing, assembly, ground infrastructure, and space transportation systems mean that disruption in any single component could trigger cascading effects across our entire operations.”