Yen Rises Amid Risk-off Mood, BoJ Rate Hike Bets

(RTTNews) - The safe-haven yen strengthened against other major currencies in the Asian session on Wednesday amid increased risk-off mood by the investors, as the latest set of U.S. tariffs, including a massive 104 percent levy on Chinese imports, take effect today, leaving investors worried about the impact on inflation, interest rates and global growth. Additionally, the traders expect the Bank of Japan to raise its interest rate in 2025.

"Trade wars are extremely negative. Nobody wins with a trade war. Everybody tends to lose", UN Secretary-General Antonio Guterres said.

France's President Emmanuel Macron told reporters during his visit to Egypt that the main objective when it comes to the United States tariffs now is to achieve a situation where U.S. President Donald Trump reverses his decision. Nonetheless, he reiterated that a response would come if there were no deal.

The White House said many countries are lining up at the negotiating table in hopes of striking deals, with Korea and Japan among the first countries to negotiate with the U.S. directly.

Trump's economic advisor Kevin Hassett said that there are "a lot of concessions on the table" and that U.S. trade negotiators are prioritizing allies, not China, in trade talks.

Beijing, meanwhile, said it has the necessary tools to handle economic challenges. Economists and investors anticipate a potential recession if these levies persist.

Moreover, the safe-haven JPY traded higher due to anticipation that the Bank of Japan (BoJ) will raise interest rates in 2025 due to ongoing domestic inflation.

U.S. President Donald Trump has agreed to meet with Japanese officials to begin trade negotiations, which has increased the appeal of the yen and raised optimism for a possible trade accord between the US and Japan. The JPY is further supported by this optimism.

In the Asian trading today, the yen rose to a 2-day high of 159.64 against the euro, nearly a 7-month high of 185.58 against the pound and a 5-day high of 144.58 against the U.S. dollar, from yesterday's closing quotes of 160.11, 186.50 and 145.85, respectively. If the yen extends its uptrend, it is likely to find resistance around 155.00 against the euro, 179.00 against the pound and 143.00 against the greenback.

Against the Swiss franc, the yen advanced to 171.71 from an early 2-day low of 172.86. The yen may test resistance around the 167.00 region.

Looking ahead, U.S. mortgage approvals data, U.S. EIA crude oil data and U.S. FOMC minutes of its latest meeting are slated for release in the New York session.