The Japanese yen rose in Asian markets on Thursday, extending its gains for a second consecutive day against the US dollar. The rebound moved the yen further away from a two-week low, driven by renewed buying at lower levels and comments from Japanese officials regarding the currency’s performance in the foreign exchange market.

Expectations for a potential interest rate hike by the Bank of Japan in July have increased following last week’s strong economic data out of Tokyo. Markets now await further indicators on inflation, wages, and unemployment in the world’s third-largest economy.

The Price

The USD/JPY pair fell 0.4% on Thursday to ¥145.75, down from the day’s opening level of ¥146.30, after touching a session high of ¥146.32.

On Wednesday, the yen had settled up 0.3% against the dollar—its first gain in three days—recovering from the two-week low of ¥147.18.

Japanese Authorities Comment

Masatsugu Asakawa, Japan’s former top currency diplomat, told Reuters that Japan is unlikely to face US pressure to deliberately strengthen the yen, despite President Donald Trump’s criticisms of the country’s large trade surplus with the US.

Asakawa emphasized that the dollar’s status as a global reserve currency remains strong. However, it has become more vulnerable to selling pressure after Trump’s April 2 announcement of sweeping “reciprocal” tariffs.

In an interview late Wednesday, Asakawa said a weaker dollar could accelerate inflation in the United States—a risk he believes Treasury Secretary Scott Bessent is well aware of.

He added that, to his knowledge, there are no specific currency discussions between Bessent and Japan’s Finance Minister Katsunobu Kato in the context of ongoing trade talks.

Asakawa also noted that predicting the outcome of bilateral trade negotiations remains difficult, particularly as Trump has shown little interest in Japan’s efforts to secure exemptions on auto tariffs.

Interest Rate Outlook

Last week’s data from Tokyo showed household spending in Japan surged by 4.7% year-on-year in May—the fastest pace since August 2022. This sharply beat market expectations for a 1.3% increase, after a 0.1% decline in April.

Following the strong spending data, market pricing for a 25-basis-point rate hike by the Bank of Japan in July rose from 40% to 45%.

Investors are now looking to upcoming releases on inflation, wages, and unemployment to further calibrate their expectations for the July policy decision.

US stock indices climbed during Wednesday’s session and held onto their gains following the release of the Federal Reserve’s meeting minutes. The Nasdaq Composite posted a new all-time closing high, with Nvidia leading broader market gains.

President Donald Trump expanded the scope of his global trade war on Tuesday by announcing a 50% tariff on US copper imports, adding that long-threatened levies on semiconductors and pharmaceuticals would follow soon.

The announcement came a day after Trump imposed steep tariffs on 14 major trading partners, including South Korea and Japan—two of the top suppliers to the United States. He also renewed his threat to impose 10% tariffs on imports from Brazil, India, and other BRICS nations.

Separately, Trump escalated his criticism of Federal Reserve Chairman Jerome Powell, calling for his immediate resignation.

The minutes from the Federal Reserve’s June meeting revealed a divide among officials over how aggressively interest rates should be cut, amid concerns about inflation from tariffs versus signs of labor market softness and ongoing economic strength.

The minutes, covering the June 17–18 meeting and released Wednesday, showed policymakers largely maintaining a “wait-and-see” approach on future rate moves. The meeting concluded with a unanimous decision to keep the federal funds rate in the 4.25% to 4.5% range, where it has remained since December 2024.

At the closing bell, the Dow Jones Industrial Average rose 0.5% (217 points) to 44,458, after reaching a high of 44,556 and a low of 44,225.

The broader S&P 500 index gained 0.6% (37 points) to 6,263, trading between 6,269 and 6,231 during the session.

The Nasdaq Composite climbed 0.9% (193 points) to 20,611, marking a new record, with an intraday high of 20,645 and a low of 20,486.

Soybean prices declined during Wednesday’s trading session on the Chicago Board of Trade, as traders awaited a key report from the U.S. Department of Agriculture, with expectations pointing to higher grain stockpiles.

Nearby soybean futures contracts recorded losses ranging between 5 and 8 cents on Wednesday. According to cmdtyView, the national average cash price for soybeans dropped by 8 cents to $9.73 per bushel.

In the by-products market, soybean meal futures fell by $1.20 per ton, while soybean oil prices declined by 56 to 73 points. Additionally, 139 more delivery notices were issued overnight against July soybean meal contracts, bringing the total deliveries so far this month to 4,047 contracts.

As markets anticipate the USDA’s upcoming reports on Friday, analysts forecast a 10-million-bushel increase in ending stocks for the old-crop soybeans, raising the total to 360 million bushels.

For the new season crop, a Bloomberg survey indicated traders expect a 7-million-bushel decline in production, due to a slight reduction in planted acreage, with total output seen at 4.333 billion bushels.

Ending stocks for the 2025/2026 season are projected to reach 302 million bushels, up by 7 million from the USDA’s June estimate.

Corn

Corn futures for December delivery rose 0.4% at the close to $4.15 per bushel.

Soybeans

Soybean futures for November delivery settled 1% lower at $10.07 per bushel.

Wheat

Wheat futures for September delivery edged down by less than 0.1% to settle at $5.47 per bushel.

Gold prices rose during Wednesday's trading session, supported by a steady U.S. dollar and heightened market focus on ongoing trade developments.

On Tuesday, U.S. President Donald Trump escalated his global trade war by announcing a 50% tariff on copper imports. He also stated that long-threatened tariffs on semiconductors and pharmaceuticals would be introduced soon.

This announcement followed a sharp tariff hike targeting 14 trade partners just a day earlier, including key suppliers South Korea and Japan. Trump also reiterated threats to impose a 10% tariff on imports from Brazil, India, and other BRICS nations.

Separately, Trump renewed his criticism of Federal Reserve Chair Jerome Powell, calling once again for his immediate resignation.

Minutes from the Federal Reserve’s June meeting, released Wednesday, revealed a division among policymakers over how aggressively interest rates should be cut. While concerns over tariff-induced inflation remain, there were also signs of labor market softness and underlying economic resilience.

The meeting, held on June 17–18, ended with a unanimous decision to maintain the federal funds rate at 4.25%–4.5%, a level unchanged since December 2024. Officials largely maintained a "wait-and-see" stance regarding future policy moves.

As for the U.S. dollar, the Dollar Index was steady at 97.5 by 20:21 GMT, having recorded a session high of 97.7 and a low of 97.4.

In commodities markets, spot gold rose 0.2% to $3,324.20 per ounce by 20:23 GMT.