- The USD/JPY rises strongly about 145.45 as the US dollar is strengthened in the middle of the US commercial nerves.
- The president of the United States Trump prepares to announce tariff rates for nations that have not reached a commercial agreement with Washington.
- Investors doubt whether the BOJ will raise interest rates this year again.
The USD/JPY torque wins strongly about 145.45 during the European negotiation session on Monday, the highest level seen in a week. The pair is strengthened as the US dollar (USD) is firmly negotiated, with investors waiting for the names of the countries that will receive letters from the president of the United States (USA) Donald Trump, specifying reciprocal tariffs.
The US dollar index (DXY), which tracks the value of the dollar against six main currencies, reviews the weekly maximum around 97.45.
During the weekend, US President Trump said he will publish letters describing import rights rates for 12 countries on Monday in the regressive account for the dated dated dated July 9. Until now, the US has announced trade agreements with the United Kingdom (UK) and Vietnam, and has signed a limited pact with China.
Market participants are concerned that the imposition of reciprocal tariffs by the US to one of its main commercial partners disorders global trade. Such scenario will increase the demand for shelter assets, such as Japanese Yen (JPY).
In the front of Tokyo, investors look for new clues about whether the Bank of Japan (Boj) will raise interest rates this year. Last week, the BOJ council member, Hajime Takata, highlighted the need to accommodate policies to cope with the impact of tariffs by the USA.
“My opinion is that the BOJ needs to support economic activity at the moment maintaining its current position of accommodating monetary policy, Takata said.
US Dollar – Frequently Questions
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.
