Yen Falls As Traders Speculate BoJ Rate Hike Pause

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Wednesday, as traders speculate that the Bank of Japan (BoJ) will not raise interest rates this year due to worries about the economic effects of rising U.S. tariffs.

Ahead of the July 20 House of Councillors election, domestic political uncertainty may prevent the JPY bulls from making aggressive bets.

Concerns persist about U.S. President Donald Trump's trade wars still hanging over the markets, though a deadline in fixed for August 1 to reach deals with partner trading countries.

After striking a trade deal with Indonesia, Trump announced potential tariffs on imported pharmaceuticals by month's end, followed by semiconductor levies.

Trump on Tuesday said Indonesia will buy 50 Boeing jets, energy and farm goods worth billions. In return, Indonesian exports will face a 19 percent tariff and the United States would not pay any tariffs on its goods.

Trump also said that a trade agreement with Vietnam was nearly complete and that the United States is close to getting full trade access to India.

Meanwhile, the Wall Street Journal reported that the European Union is preparing a second list of U.S. products, including aircraft, machinery and wines worth around $77 billion, that would face retaliatory duties if the bloc doesn't reach a deal by Trump's Aug. 1 deadline.

In the Asian trading now, the yen fell to more than a 1-year low of 173.24 against the euro and a 1-week low of 199.74 against the pound, from yesterday's closing quotes of 172.69 and 199.26, respectively. If the yen extends its downtrend, it is likely to find support around 174.00 against the euro and 201.00 against the pound.

Against the U.S. and the Canadian dollars, the yen slipped to nearly a 3-1/2-month low of 149.18 and nearly a 6-month low of 108.74 from Tuesday's closing quotes of 148.78 and 108.47, respectively. The yen may test support around 151.00 against the greenback and 109.00 against the loonie.

The yen edged down to 186.03 against the Swiss franc, from yesterday's closing value of 185.63. On the downside, 187.00 is seen as the next support level for the yen.

Looking ahead, U.S. MBA mortgage approvals data, U.S. PPI data for June, U.S. industrial and manufacturing productions data for June, U.S. EIA crude oil data and Canada housing starts data for June are slated for release in the New York session.