The Japanese Yen (JPY) continued to increase in price in the Asian trading session on the morning of October 17, marking a series of four consecutive days of upward movement and reaching a two-week high, as the US Dollar (USD) weakened widely.
Risk-off sentiment is engulfing the global financial market as US-China trade relations continue to strengthen. Both countries have just imposed additional port fees on each other's vessels, after the US expanded technology restrictions and China tightened control of rare earth exports.
This development raises concerns about a full-scale trade war, causing investors to seek safe-haven assets such as the Yen.
Japanese Yen increases sharply, USD/JPY falls below 150 due to weak USD
According to FXStreet, geopolitical tensions have also increased as US President Donald Trump announced that he will meet Russian President Vladimir Putin in Budapest (Hungary) to find a way to end the conflict in Ukraine, and is expected to meet Ukrainian President Volodymyr Zelenskyy on October 17. Meanwhile, Russia continues to attack a series of targets in eastern Ukraine with drones, missiles and wardens, further cautiousing investors.
In Japan, the end of the Liberal Democratic Party (LDP) alliance with the Komeito Party has helped ease concerns about the fiscal burden, thereby strengthening confidence that the Bank of Japan (BoJ) could soon raise interest rates. Speaking on October 17, BoJ Governor Kazuo Ueda said the impact of tariffs on the global economy is still slow, but the BoJ will adjust monetary policy flexibly depending on growth prospects and inflation.
Meanwhile, the US dollar continues to be pressured after dovish comments from US Federal Reserve Chairman Jerome Powell, reinforcing expectations that the Fed will cut interest rates twice in 2025. At the same time, the deadlock in the US Congress over the government reopening bill has dragged on, as the Senate rejected the proposal for the 10th time, adding investors to concerns about the negative economic impact of the government shutdown.
