- The USD/JPY collapses below 144.00 amid the tensions between US President Trump and the president of the Fed, Powell, on the interest rates policy.
- The USD index marks a new minimum of three years around 97.00.
- The Japan government will probably review the GDP growth forecast for the year below 1%.
The USD/JPY torque has dropped more than 0.8% to about 143.75 during Thursday’s European negotiation hours. The PAR faces a strong sales pressure after the confirmation of the president of the United States (USA), Donald Trump, that he will announce the replacement of the president of the Federal Reserve (Fed), Jerome Powell, after Powell’s support to maintain interest rates in waiting until the Central Bank obtains clarity on the impact of tariffs.
On Wednesday, President Trump described Jerome Powell as “terrible” for not reducing interest rates, while talking with reporters, even if inflation has cooled in recent months and said he has three or four names for replacement, Reuters reported.
This measure has raised questions about the credibility of the decisions that the Fed will make after Powell’s replacement, assuming that Donald Trump’s contender will prefer his economic agenda on the dual mandate.
The uncertainty about the future credibility of the FED has severely impacted the exceptionalism of the US dollar (USD), sending the index of the US dollar (DXY) to a new minimum of three years around 97.00.
Meanwhile, a strong drop in the US dollar has increased the attractiveness of the safe refuge of the Japanese Yen (JPY), which is surpassing in all areas.
And in Japanese price today
The lower table shows the rate of change of Japanese Yen (JPY) compared to the main currencies today. The Japanese Yen was the strongest currency against the US dollar.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.46% | -0.56% | -0.68% | -0.30% | -0.48% | -0.36% | -0.49% | |
| EUR | 0.46% | -0.04% | -0.24% | 0.18% | 0.02% | 0.10% | -0.01% | |
| GBP | 0.56% | 0.04% | -0.20% | 0.23% | 0.07% | 0.16% | 0.03% | |
| JPY | 0.68% | 0.24% | 0.20% | 0.40% | 0.24% | 0.30% | 0.21% | |
| CAD | 0.30% | -0.18% | -0.23% | -0.40% | -0.15% | -0.16% | -0.19% | |
| Aud | 0.48% | -0.02% | -0.07% | -0.24% | 0.15% | 0.00% | -0.04% | |
| NZD | 0.36% | -0.10% | -0.16% | -0.30% | 0.16% | -0.00% | -0.03% | |
| CHF | 0.49% | 0.00% | -0.03% | -0.21% | 0.19% | 0.04% | 0.03% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper row. For example, if you choose the Japanese yen from the left column and move along the horizontal line to the US dollar, the percentage change shown in the picture will represent the JPY (base)/USD (quotation).
At the domestic sphere, Tokyo is expected to review its growth forecast of the Gross Domestic Product (GDP) for the current year below 1% from 1.2% projected near the end of 2024, Reuters reported. The reason behind the downward revision in growth forecasts for the current year are the risks of global trade caused by the imposition of tariff policy by the US.
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 in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
