Japanese Yen Hits 4-Week High
The Japanese yen appreciated towards 142 against the US dollar on Tuesday, marking its strongest level in four weeks. This movement came as the US dollar weakened due to escalating fiscal concerns. Investor sentiment was dampened by President Donald Trump's extensive tax and spending proposal, anticipated to notably expand the US fiscal deficit. Concurrently, the yen drew support from its status as a safe-haven asset amid heightened market volatility stemming from Trump's unpredictable trade policies. An instance of this uncertainty occurred when Trump, after threatening a 50% tariff on the European Union, unexpectedly postponed the decision, further unsettling investors. Domestically, the focus remains on the Bank of Japan's monetary policy direction, with rising expectations of continued tightening due to enduring inflationary pressure. Supporting this outlook, recent data revealed an unexpected rise in Japan's core inflation rate to 3.5%, the highest in over two years, reinforcing the potential for future interest rate hikes.
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