USD/JPY falls below 147.50 following fresh threats from Trump
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USD/JPY depreciates as the US Dollar struggles after Trump threatened to remove Fed Governor Lisa Cook.
Trump also threatened additional tariffs and export controls in retaliation against digital services taxes.
Public support increased for Japanese Prime Minister Ishiba despite his ruling coalition's loss in July's election.
USD/JPY retraces its recent gains registered in the previous session, trading around 147.30 during the Asian hours on Tuesday. The pair depreciates as the US Dollar (USD) faces challenges amid concerns over Federal Reserve (Fed) independence after the US President Donald Trump threatened to remove Fed Governor Lisa Cook.
President Trump posted a letter on social media early Tuesday, saying that he was removing Fed Governor Cook from her position on the Fed's board of directors. Cook’s exit will allow Trump to tap a replacement, helping him to exert more control over Fed policy, per Reuters.
Additionally, Trump threatened "subsequent additional tariffs" and export restrictions on advanced technology and semiconductors in retaliation for digital services taxes that hit American technology companies, per Bloomberg.
Market sentiment turned cautious after President Trump, in an Oval Office meeting with South Korean President Lee Jae Myung on Monday, warned that he may impose a 200% tariff on Chinese goods if China refuses to supply magnets to the United States (US), amid Beijing’s tighter control over rare earth mining.
The Japanese Yen (JPY) could gain ground amid increasing stability in Japanese domestic politics, with improving public approval after Japan reached a trade deal with the United States (US) and the announcement of increasing rice production.
Reuters cited a Yomiuri newspaper public opinion poll on Monday, showing a 20% rise in support for Japanese Prime Minister Shigeru Ishiba despite his ruling coalition losing its majority in July's parliamentary election. Support for Ishiba’s cabinet rose to 39%, marking a 17% jump from last month’s post–upper house election survey.
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