Yen Falls As Traders Speculate BoJ Rate Hike Pause

(RTTNews) - The Japanese yen weakened against other major currencies in the late Asian session on Wednesday, as traders reduced their bets on an immediate interest rate hike by the Bank of Japan (BoJ) due to worries about the possible economic effects of US President Donald Trump's trade tariffs.

Trump said Tuesday his extended Aug. 1 deadline for his "Liberation Day" tariffs will stick, after previously suggesting it wasn't "100 percent firm."

Trump also announced a 50 percent tariff on copper imports, hinted at a potential 200 percent tariff on pharmaceuticals, and an additional 10 percent tariff on BRICS nations and their allies, marking a new phase in his aggressive trade policy.

Traders also look ahead to the release of the minutes of the US Fed's latest monetary policy meeting on Wednesday. It may shed light on the outlook for interest rates ahead of the central bank's next meeting on July 29-30. CME Group's FedWatch Tool is currently indicating a 95.3 percent chance the Fed will leave rates unchanged this month.

In a cabinet meeting on Tuesday, Japanese Prime Minister Shigeru Ishiba stated that bilateral negotiations will go on in an effort to find a trade agreement that would benefit both parties.

In economic news, data from the Bank of Japan showed that the M2 money stock was up 0.9 percent on year in June, coming in at 1,268.4 trillion yen. That topped expectations for an annual increase of 0.2 percent and was up from 0.6 percent in May.

The M3 money stock rose 0.4 percent to 1,616.2 trillion yen, accelerating from 0.2 percent in the previous month.

In the late Asia trading today, the yen declined to a record low of 184.57 against the Swiss franc, nearly a 1-year low of 172.28 against the euro and more than an 8-month low of 199.83 against the pound, from early highs of 184.02, 171.63 and 199.28, respectively. If the yen extends its downtrend, it is likely to find support around 186.00 against the franc, 174.00 against the euro and 201.00 against the pound.

Against the U.S. and the New Zealand dollars, the yen dropped to more than a 2-week low of 147.18 and nearly a 6-month low of 88.34 from early highs of 146.54 and 87.91, respectively. On the downside, 148.00 against the greenback and 89.00 against the kiwi are seen as the next support levels for the yen.

Against the Australia and the Canadian dollars, the yen slipped to near 5-month lows of 96.22 and 107.55 from early highs of 95.72 and 107.09, respectively. The yen may test support near 98.00 against the aussie and 109.00 against the loonie. Looking ahead, U.S. MBA mortgage approvals data, U.S. wholesale inventories for May, U.S. EIA crude oil data and U.S. FOMC minutes are due to be release in the New York session.