- The USD/JPY gains ground while the Japanese Yen does not yield as his peers in the face of hopes of de -escalation in the commercial war between the US and China.
- Both US and China have agreed commercial discussions this week.
- The Fed is almost sure of maintaining stable interest rates.
The USD/JPY pair bounces about 143.30 on Wednesday, breaking the three -day streak. The pair gains ground while the Japanese yen (JPY) does not yield as his peers in all areas. Investors have cut long positions in Yen since their appeal as a safe refuge has decreased after Washington confirmed that he will have commercial conversations with China this week in Switzerland.
On Tuesday, US Treasury Secretary Scott Besent, and Commerce Representative Jamieson Greer, confirmed that they will meet their Chinese counterparts for commercial and economic discussions this week in Switzerland. Besent said that discussions would focus more on descaling the trade war than in negotiating an agreement.
“My impression is that this will be discharged, not the great commercial agreement,” Besent said, according to CNBC.
Investors see the event as a constructive movement of both nations towards the end of the commercial war, which has led to a decrease in the demand for safe refuge assets. JPY’s demand as a safe refuge has remained optimistic in recent weeks due to uncertainty about commercial perspectives between the US and China.
At the national level, traders doubt that the Bank of Japan (BOJ) raises interest rates in the short term due to cracks in global economic perspectives amid the disruptive commercial policies of US President Donald Trump.
Meanwhile, the US dollar (USD) is quoted in a narrow range around 99.40, at the time of writing, before the Federal Reserve Monetary Policy announcement (FED) at 18:00 GMT.
According to the CME Fedwatch tool, traders have completely incorporated that the Central Bank will maintain stable interest rates in the range of 4.25%-4.50%. Therefore, the main trigger for the US dollar will be the monetary policy orientation of the Fed for the rest of the year.
The Fed is expected to face a difficult choice between maintaining sufficient interest rates until clarity on the economic perspectives before the new economic policies announced by President Trump and act prematurely.
Economic indicator
Fed interest rates decision
The Federal Reserve (Fed) Delibera on monetary policy and makes a decision on interest rates in eight preprogrammed meetings per year. It has two mandates: maintain inflation in 2% and maintain full employment. Its main tool to achieve this is to establish interest rates, both to those that it lends to banks and to those that banks lend each other. If you decide to raise the fees, the US dollar (USD) tends to strengthen since it attracts more foreign capital tickets. If the rates lower, it tends to weaken the USD since capital is drained towards countries that offer greater returns. If the rates remain unchanged, the attention focuses on the tone of the Federal Open Market Committee (FOMC), and if it is a hard line (expectancy of higher interest rates in the future) or moderate (expectation of lower rates in the future).
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Next publication:
MIÉ MAY 07, 2025 18:00
Frequency:
Irregular
Dear:
4.5%
Previous:
4.5%
Fountain:
Federal Reserve
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.
