NEWS

The Japanese yen climbed in Asian trading on Thursday, advancing against a basket of major and minor currencies. The yen resumed its upward momentum, which briefly paused yesterday against the US dollar, nearing its highest level in at least two weeks. This gain was fueled by ongoing selling pressure on the dollar amid rising concerns over US financial and monetary stability.

The US dollar dropped to a fresh three-year low, driven by renewed market anxiety about the economic outlook in the United States. The decline was exacerbated by fresh criticism from former President Donald Trump targeting Federal Reserve Chair Jerome Powell.

Yen-Dollar Price Action

The dollar weakened by 0.4% against the yen, falling to ¥144.57, compared to the opening price of ¥145.16, and recorded an intraday high of ¥145.26.
On Wednesday, the yen had slipped 0.2% versus the dollar after a sharp 0.85% rebound the day before, recovering from its six-week low of ¥148.03.

Meanwhile, the US Dollar Index fell by 0.45%, extending its losing streak to a fourth consecutive session and hitting a three-year low at 97.27 points. This reflects sustained weakness in the dollar against a broad range of global currencies.

Political Pressure on the Federal Reserve

The dollar’s downturn also comes amid escalating political tension. In a new round of statements, Donald Trump openly criticized Fed Chair Jerome Powell, accusing him of refusing to cut interest rates aggressively. Trump hinted that Powell might soon be replaced.

According to reports, Trump may announce a successor to Powell as early as September or October — a move that could undermine the perceived independence of the Federal Reserve and stir uncertainty in the global forex market.

Expert Analysis

Kieran Williams, Head of Asia FX Strategy, warned that early attempts to replace the Fed Chair could alarm global markets — especially if viewed as politically motivated.

He explained: “Such a move could raise doubts about the Fed’s autonomy and weaken its credibility. If that happens, markets may reprice interest rate expectations, leading to a reassessment of the dollar’s value.”

Japanese Monetary Policy in Focus

In contrast, the outlook for an interest rate hike by the Bank of Japan (BoJ) remains subdued. Current market pricing indicates less than a 40% probability of a 25 basis point rate hike during the BoJ’s upcoming July meeting.

Investors are now eyeing key economic data releases due on Friday, including Tokyo inflation figures, unemployment rate, and monthly retail sales, which may influence the BoJ’s next policy steps.