|

USD/JPY weakens as investors seek refuge in the Yen amid weak US PMI data

  • US May’s ISM Manufacturing PMI fell to a fresh six-month low.
  • USD/JPY extends losses on rising demand for the safe-haven Yen.
  • The US Dollar falls against its major counterparts with Trump tariffs back in focus.
  • The Japanese Yen benefits from its safe-haven appeal, with the USD/JPY pair trading below 143.00 at the time of writing.

The Japanese Yen (JPY) is gaining strength against the US Dollar (USD) on Monday, as investors seek refuge in the Yen’s safe-haven appeal.

With renewed concerns surrounding US President Donald Trump’s aggressive tariff policies triggering a wave of market caution, USD/JPY has extended losses, trading below 143.00 at the time of writing.

Trump tariffs weigh on US Dollar, tumbles to six-week low per DXY

One of the key factors driving the current weakness in the US Dollar is the growing anxiety surrounding the impact of President Trump's trade policies. The US has recently threatened to double tariffs on steel and aluminum imports from 25% to 50%, sparking fears of an escalating trade war. 

These moves are raising concerns among investors that the global economy could face slower growth, particularly as inflationary pressures from higher import costs could ripple through the economy.

Still in the United States, May’s ISM Manufacturing Purchasing Managers Index (PMI) fell to 48.5, missing forecasts of a modest uptick to 49.5 and reaching a six-month low.

Trump’s tariffs, coupled with the ongoing trade standoff with China and other major economies, have the potential to hinder US economic growth. If tariffs continue to rise, businesses may face higher input costs, potentially leading to reduced corporate profit margins and lower consumer spending. 

In contrast, the Japanese Yen is gaining ground. The Yen is considered a safe-haven currency, meaning that in times of global uncertainty, investors tend to move their assets into the Yen. Its safe-haven appeal has been particularly evident in the wake of the increasing US tariff threats and the uncertainty surrounding global trade.

As markets continue to digest the implications of Trump's tariff policies, the Yen has appreciated against the USD, with the USD/JPY currency pair dropping to key support levels. Japan's relatively stable economic and political environment, coupled with its strong industrial base and low inflation, continues to make the Yen an attractive alternative to riskier currencies during turbulent times.

Market participants are closely monitoring developments in US trade policy, as any new announcements regarding tariffs could trigger further volatility in the USD/JPY pair. The upcoming meeting between US President Trump and Germany’s new Chancellor Friedrich Merz, expected to take place this week, could also add fuel to the ongoing uncertainty and influence the direction of the Dollar.

Japanese Yen PRICE This week

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.70%-0.47%-0.67%-0.17%-0.79%-1.05%-0.68%
EUR0.70%0.23%0.05%0.52%-0.08%-0.38%0.01%
GBP0.47%-0.23%-0.15%0.29%-0.31%-0.61%-0.22%
JPY0.67%-0.05%0.15%0.50%-0.13%-0.40%-0.11%
CAD0.17%-0.52%-0.29%-0.50%-0.61%-0.89%-0.51%
AUD0.79%0.08%0.31%0.13%0.61%-0.24%0.17%
NZD1.05%0.38%0.61%0.40%0.89%0.24%0.39%
CHF0.68%-0.01%0.22%0.11%0.51%-0.17%-0.39%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Author

Tammy Da Costa, CFTe®

Tammy is an economist and market analyst with a deep passion for financial markets, particularly commodities and geopolitics.

More from Tammy Da Costa, CFTe®
Share:

Editor's Picks

AUD/USD holds above 0.7050 as hot CPI boosts RBA hike bets

The AUD/USD drifts higher by 0.40% on Wednesday after the Federal Reserve held rates unchanged, while Fed Chair Kevin Warsh hinted that "officials had made clear our readiness to act as circumstances require, and we have shown our willingness to act.” The AUD/USD trades at 0.7053.

USD/JPY: Japanese Yen recovers modestly as Warsh reaffirms Fed’s 2% target

The Japanese Yen recovers some ground against the US Dollar on Wednesday after Federal Reserve Chair Kevin Warsh crossed the wires, saying the FOMC will deliver price stability and is committed to the 2% inflation goal. USD/JPY trades at 157.89, down 0.02%.

Gold declines to near $4,050 after Fed rate hold, markets await US PCE data

Gold price edges lower to around $4,050 during the early Asian session on Thursday. Markets assess comments from Federal Reserve Chair Kevin Warsh after the US central bank left benchmark interest rates unchanged at its October policy meeting.

Bitcoin volatility falls to 2023 lows, Glassnode says

Bitcoin climbed above $81,000 on Wednesday as the Federal Reserve (Fed) kept interest rates unchanged at 3.75%–4.00% in a 10–2 vote. The decision came as the top crypto's realized volatility fell to levels last seen in the summer of 2023.

Fed's recap: A cautious hold with a clear warning on inflation
The Federal Reserve (Fed) held its policy rate steady at 3.75%-4.00%, but it wasn’t a unanimous decision. Among two officials who wanted a 25-basis-point hike were Lisa Cook and Beth Hammack, while Chair Kevin Warsh said the Fed would use the coming flow of information to decide whether further action is needed. The statement presented a resilient economy.
Anthropic pledged $270 billion to Amazon, Google, and Microsoft. Here's who actually gets paid
Anthropic owes Amazon, Google, and Microsoft at least $269.4 billion for computing power, even if it uses less. All three sell its models and handle its billing, and Amazon and Google own stakes and lend it money, so they get paid regardless of how the IPO goes. The Dario Amodei-led Anthropic filed its initial public offering (IPO) on Monday, seeking a listing on the Nasdaq under the ticker ANT.