USD/JPY corrects to near 145.00 as US Dollar retraces, US-China trade talks in spotlight
- USD/JPY falls back to near as the US Dollar corrects ahead of trade talks between the US and China.
- US President Trump announced that tariffs on China could be lowered to 80%.
- Japan’s Overall Household Spending rose at a robust pace of 2.1% on year in March.
The USD/JPY pair retraces to near 145.00 during North American trading hours on Friday after failing to extend its upside above almost a month's high of 146.20 earlier in the day. The pair corrects as the US Dollar (USD) falls back, with investors turning cautious ahead of trade talks between the United States (US) and China on Saturday.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, gives back its initial gains and falls to near 100.30.
Investors will pay close attention to the US-China trade talks as the ongoing tariff war between them has led market experts to downgrade the US and the global economic outlook.
Ahead of the US-China meeting, President Donald Trump has signaled that tariffs on Beijing could be reduced to 80% through a post on Truth.Social. "80% Tariff on China seems right! It's up to Scott Bessent," Trump said.
In last two trading sessions, the US Dollar traded firmly as the Federal Reserve (Fed) guided that there is no rush for interest rate cuts in the monetary policy announcement on Wednesday and the declaration of US-United Kingdom (UK) trade deal, the first by the White House since the release of reciprocal tariffs.
Meanwhile, the Japanese Yen (JPY) outperforms its peers on Friday as uncertainty ahead of Sino-US trade talks has increased its safe-haven demand.
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.57% | -0.52% | -0.71% | -0.01% | -0.47% | -0.23% | -0.59% | |
| EUR | 0.57% | 0.03% | -0.18% | 0.55% | 0.10% | 0.33% | -0.04% | |
| GBP | 0.52% | -0.03% | -0.21% | 0.52% | 0.06% | 0.29% | -0.04% | |
| JPY | 0.71% | 0.18% | 0.21% | 0.72% | 0.26% | 0.48% | 0.16% | |
| CAD | 0.00% | -0.55% | -0.52% | -0.72% | -0.47% | -0.22% | -0.56% | |
| AUD | 0.47% | -0.10% | -0.06% | -0.26% | 0.47% | 0.23% | -0.10% | |
| NZD | 0.23% | -0.33% | -0.29% | -0.48% | 0.22% | -0.23% | -0.33% | |
| CHF | 0.59% | 0.04% | 0.04% | -0.16% | 0.56% | 0.10% | 0.33% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Domestically, Japan’s Overall Household Spending data for March has come in better than projected. The Overall Household Spending, a key measure of consumer spending, rose at a robust pace of 2.1% year-on-year compared to estimates of 0.2%. In February, the consumer spending measure declined by 0.5%.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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