The Japanese yen rose in Asian trade on Monday against major rivals, maintaining gains for the third straight session against the dollar, and about to hit seven-month highs on haven demand. 

It comes following bullish remarks from some policymakers in Japan’s governing party, who are seeking a strong local currency to reduce living costs for households. 

Some Japanese government policymakers also advised not to deliberately sell US treasury bonds in response to Trump’s tariffs.

The Price

The USD/JPY fell 1% today to 142.25 yen per dollar, with a session-high at 144.05.

The yen rose 0.7% on Friday against the greenback, hitting a seven-month high at 142.05 on concerns about the global trade war.

The yen rose 2.4% last week on the dollar, the second weekly profit in a row on haven demand.

Bullish Remarks

Officials from the Democratic Liberal Party in Japan expressed desire to strengthen the yen and boost the competitiveness of Japanese exports.

They called on the government not to weaponize its holdings of US treasury bonds in response to President Donald Trump’s aggressive tariffs.

Trade Negotiations

Bilateral US-Japan trade talks will take place this week and will cover many issues, including the currency’s weakness.

According to Reuters sources, the current slow pace of Bank of Japan interest rate hikes could be criticized by the US side.

Japanese Rates

Amid mounting risks facing the Japanese economy, and especially the aggressive US tariffs, traders reduced the odds of another BOJ rate hike this year to nearly zero.

US Rates

Recent US data showed inflation slowed down more than expected in March, reducing the pressure on Fed’s policymakers.

Following the data, the odds of a Fed 0.25% rate cut in May rose from 15% to 25%, while the odds of such a cut in June rallied to 85%.

Interest Rate Gap

The current US-Japan interest rate gap is standing at 400 basis points in favor of the US, and will likely shrink to 375 basis points in the first half of the year, underpinning the yen against the greenback.

Oil prices rose on Friday and expanded their recent gains after threats by the US government to increase sanctions on the Iranian oil industry.

As the trade war intensifies, China today decided to raise tariffs on all US products to 125% in yet another brutal escalation in the trade war.

On trading, Brent June futures rose 2.25%, or $1.43 to $64.76 a barrel, with a weekly loss of 1.25%.

US crude futures due in May rose 2.4%, or $1.43, reducing this week’s losses to 0.8%.

Sterling rose against most major rivals on Friday following better than expected growth data.

UK GDP growth clocked in at 0.5% last month, while analysts expected a 0.1% rise.

On trading, GBP/USD rose 0.8% as of 20:34 GMT to $1.3072.

Aussie

The Australian dollar rallied 1% against its US counterpart as of 20:34 GMT to 0.6285.

US Dollar

The dollar index fell 1% as of 20:25 GMT to 99.8, with a session-low at 99.01.

In yet another escalation to the devastating US-China trade war, Beijing raised tariffs on all US goods from 84% to 125%.

It’s in response to US President Donald Trump’s 145% tariffs on US goods, which were confirmed yesterday.

The latest escalation comes after a long series of reciprocal measures between both sides starting January 2018, when the US imposed tariffs on Chinese goods and accused China of unfair trade practices. 

China asserted it will “fight till the end” and warned Trump that any escalation will be faced with similar responses.

China said it won’t respond to any more tariff hikes from the US as it would be meaningless after this point, with American products already losing their viability in the Chinese market.

Bloomberg that China has restricted rare earth metals exports to near zero in response to the war. 

Otherwise, earlier data showed US producer prices rose 2.7% y/y in March, slowing down from 3.2% in the previous reading, while analysts expected a 3.3% rise.

Core prices excluding food and energy, rose 3.3%, down from 3.5% in February, and below estimates of 3.6%.

Gold prices rallied on Friday as the dollar slumped against most major rivals, with the precious metal attracting haven demand amid the US-China trade escalation.

In yet another escalation to the devastating US-China trade war, Beijing raised tariffs on all US goods from 84% to 125%.

It’s in response to US President Donald Trump’s 145% tariffs on US goods, which were confirmed yesterday.

The latest escalation comes after a long series of reciprocal measures between both sides starting January 2018, when the US imposed tariffs on Chinese goods and accused China of unfair trade practices. 

China asserted it will “fight till the end” and warned Trump that any escalation will be faced with similar responses.

China said it won’t respond to any more tariff hikes from the US as it would be meaningless after this point, with American products already losing their viability in the Chinese market.

Bloomberg that China has restricted rare earth metals exports to near zero in response to the war. 

Otherwise, earlier data showed US producer prices rose 2.7% y/y in March, slowing down from 3.2% in the previous reading, while analysts expected a 3.3% rise.

Core prices excluding food and energy, rose 3.3%, down from 3.5% in February, and below estimates of 3.6%.

On trading, the dollar index fell 0.8% as of 14:59 GMT to 100.04, with a session-high at 100.7, and a low at 99.01.

Gold spot prices rose 2.4% as of 15:19 GMT, or $76.1 to $3252.70 an ounce.