FX.co ★ Japanese Yen Extends Rally on Dollar Weakness

The Japanese yen advanced further, nearing 143 per dollar on Thursday—its highest point in over two weeks—driven by growing concerns about the US fiscal outlook, which exerted pressure on the dollar. The yen's ascent was bolstered by apprehensions that President Donald Trump's proposed tax reductions, anticipated to increase US debt by over $3 trillion, might destabilize financial markets and erode confidence in US assets. On the diplomatic front, Japanese Finance Minister Katsunobu Kato clarified that he did not discuss exchange rate matters with US Treasury Secretary Scott Bessent during the G7 meetings in Canada—dismissing speculations about any coordinated currency intervention. Domestically, Japan's economic indicators presented mixed results. Core machinery orders, a key measure of capital investment, jumped by 13% in March, significantly surpassing expectations for a 1.6% decrease. Conversely, PMI data indicated that manufacturing activity remained in contraction territory in May, while growth in the services sector continued to slow.