- USD/JPY eyes are a positive weekly closely as the US dollar (USD) returns.
- The US dollar is recovering as Trump expresses the confidence that he is close to making trade dealings with the number of trading partners.
- China has denied the existence of any trade negotiations in the US.
The USD/JPY pair is expected to end the week with a positive note above 143.00. The pair rode near 143.50 on Friday as the US Dollar (USD) continued its recovery in hopes that the US president (US) Donald Trump was about to make dealings with the number of his trading partners.
The US Dollar Index (DXY), which monitors the value of the greenback against its six peers, has been bouncing back to near 99.75 after a Thursday's correction.
During the North American trading time, United States Donald Trump President Donald Trump told journalists before leaving Rome for Pope Francis' funeral “trading deals”, Reuters reported. He added that the administration was close to “make dealing with Japan”.
Meanwhile, investors are unsure of the US-China trade relations due to conflicting statements from US president Trump and Beijing. While China rejects any economic and trade negotiations in the US, Trump claimed that Chinese president Xi Jinping called him while interviewing Time magazine.
“He called,” Trump said and added “I don't think the sign of weakness in his name.”
In the late European trade hours, a spokesman from the China embassy said, “China and the US do not have any consultation or negotiations with tariffs,” Reuters reported.
In the Japan region, the warmer-expected Tokyo Consumer Price Index (CPI) data for April maintains the hope of more interest rates from the Japanese bank (BOJ) life. The Tokyo CPI did not include fresh food, which was closely monitored by BOJ officials increased at a steady speed of 3.4% compared to 3.2% estimates and an earlier release of 2.4%.
US Dollar FAQ
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 in which it is found in circulation next to local notes. This is the most severely exchanged currency in the world, worth more than 88% of all global foreign exchange transfers, or an average of $ 6.6 trillion in transactions per day, according to data from 2022. Following World War II, the USD took from the British Pound as the world's reserve currency. For most of its history, the US dollar was gold -back, to the Bretton Woods agreement in 1971 when the gold standard left.
The most important single factor affecting the value of the US dollar is financial policy, shaped by the Federal Reserve (FED). Fed has two mandates: to achieve control inflation and promote full work. Its main tool to achieve these two goals is by organizing interest rates. When prices rise rapidly and inflation is above the target of 2% of the Fed, the Fed will increase rates, which contributes to USD value. When inflation falls below 2% or the unemployment rate is too high, the Fed may lower interest rates, with a greenback weight.
In extreme situations, the federal reserve can also print more dollars and make easing (QE) volume. QE is the process by which the Fed greatly increases the flow of credit to a stuck financial system. This is a non -standard policy proposal used when credit is dry because banks will not lend to each other (out of fear of default counterparts). This is a last way if only the decrease of interest rates is not likely to achieve the required result. It was the Fed weapon chosen to fight the credit crunch that occurred during the great financial crisis in 2008. It involves the Fed printing more dollars and used them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US dollar.
The quantity of tightening (QT) is the reverse process in which the federal reserve stops buying bonds from financial institutions and does not re -consist of the principal from the bonds it holds in new purchases. This is usually positive for the US dollar.
