- USD/JPY points to a positive weekly closure while the US dollar (USD) bounces.
- The US dollar is recovered since Trump has expressed confidence that he is close to making commercial agreements with several commercial partners.
- China denies having commercial negotiations with the USA.
The USD/JPY pair is expected to end the week in a positive note above 143.00. The torque shoots about 143.50 on Friday, since the US dollar (USD) has resumed its recovery movement in the hope that the president of the United States (USA), Donald Trump, is close to making agreements with several of its commercial partners.
The American dollar index (DXY), which tracks the value of the dollar against its six pairs, bounces about 99.75 after a corrective movement on Thursday.
During the negotiation hours in North America, the president of the United States (USA), Donald Trump, told reporters before leaving for Rome for the funeral of Pope Francis that “trade agreements are going well,” according to Reuters. He added that the administration is close to “making an agreement with Japan.”
Meanwhile, investors have become uncertain about commercial relations between the US and China due to contradictory statements by President Trump and Beijing. While China has been denying any economic and commercial negotiation with the US, Trump has affirmed that Chinese President Xi Jinping had called him while interviewed by Time magazine.
“He has called,” Trump said and added “I don’t think that is a sign of weakness on his part.”
In the last negotiation hours in Europe, a spokesman for the Chinese embassy said: “China and the US are not having any consultation or negotiation on tariffs,” according to Reuters.
In the Japan region, the consumer price index (CPI) of Tokyo, higher than expected for April, have kept the hopes of more increases in interest rates on the part of the Bank of Japan (BOJ) alive. Tokyo’s CPI, excluding fresh foods, which is closely followed by BOJ officials, increased at a robust pace of 3.4% compared to estimates of 3.2% and the previous publication of 2.4%.
US dollar FAQS
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 where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
