The Japanese yen rose on Friday against a basket of major rivals, maintaining its gains for the fourth straight session against the dollar and trading near six-month highs, and on track for the biggest weekly profit in 2025.
It comes amid strong haven demand on fears of a total global trade war that would tank the global economy and renew inflationary pressures.
The yen is also boosted by a steep decline in US 10-year treasury yields as investors buy the bonds aggressively, ahead of the US payrolls report for March.
The Price
The USD/JPY fell 0.5% today to 145.30, with a session-high at 146.41.
The yen rose 2.15% on Thursday against the dollar, marking the third profit in a row, and the largest since December 2023 as global markets were shaken by Trump’s reciprocal tariffs.
Weekly Trades
The yen is up 3.0% so far against the dollar this week, on track for the biggest weekly profit in 2025.
Trump’s Tariffs
US President Donald Trump announced new historic reciprocal tariffs on many countries, that start with a base 10% and rise by many folds depending on the country.
He described the new tariffs as “a declaration of independence” and today as the “liberation day”.
He accused the world of “looting, pillaging, and raping the US for many years” on the economic trade fronts, with barriers being put in front of US companies worldwide.
Trump said the new tariffs are pivotal to bring back wealth to the United States, and he believes the 1929 Great Depression wouldn’t have happened if tariffs were kept.
He called NAFTA one of the worst trade deals ever, and said a single Chinese shipping yard produces more than the entire US production of ships.
He imposed 34% additional tariffs on China, 24% on Japan, 20% on the EU, 46% on Vietnam, 26% on India, 32% on Taiwan, 10% on the UK.
Aggressive Japan tariffs
US tariffs on Japan were much higher than expected at 24%, with the Bank of Japan Governor Kazuo Ueda expecting the new tariffs to have a huge impact on global trade and growth.
Because of such developments, the odds of a Bank of Japan interest rate hike later this year tumbled to nearly zero.
US Yields
US 10-year treasury yields fell 1.7% today on track for the sixth decline in a row to a six-month low at 3.970%.
It comes as investors brace for slower growth, which could force the Federal Reserve to conduct more interest rate cuts this year.
According to the Fedwatch tool, the odds of a 0.25% Fed Rate cut in Macy rose to 28%.
The odds of such a cut in June surged to 92%.
A reduced gap between long-term Japanese and US rates would boost the appeal of Japanese yields as an investment target, in turn underpinning the yen.
