FX.co ★ Yen Slips as US-China Tensions Ease

During a subdued holiday trading session on Monday, the Japanese yen fell back towards 152 per dollar, erasing some of the gains it made previously. The decline came as reduced tensions between the US and China decreased the yen's appeal as a safe-haven currency, and investors remained attentive to political dynamics in Tokyo. Last Friday, the yen had surged over 1% after US President Donald Trump threatened to introduce an additional 100% tariff on Chinese imports starting November 1. This was in response to China's new export controls on rare earth minerals. However, Trump later indicated a willingness to negotiate before a possible meeting with Chinese President Xi Jinping later in the month, expressing confidence that trade relations with China would be resolved positively. Meanwhile, in Japan, market participants reevaluated the likelihood of LDP leader Sanae Takaichi becoming the next prime minister and implementing new fiscal stimulus measures. This followed the departure of Komeito from the ruling coalition on Friday, ending a partnership that had lasted over 25 years. The split was due to Komeito's dissatisfaction with Takaichi's handling of issues related to political funding.