FX.co ★ Yen Weakens as Dollar Gains on Trade Optimism

The Japanese yen declined to approximately 143 against the dollar on Friday, reversing the prior day's gains as the dollar gained strength amidst indications of easing global trade tensions. Despite Beijing's denials, U.S. President Donald Trump affirmed that negotiations between the U.S. and China were ongoing. Further signs of progress in trade discussions with Japan and South Korea also lent support to the dollar. Additionally, Trump reassured markets by moderating his previous criticisms of Federal Reserve Chair Jerome Powell, clarifying that he had never intended to replace him, thus alleviating some of the uncertainty surrounding monetary policy leadership. Domestically, Tokyo's core inflation rate, a key indicator of national price trends, jumped to a two-year high of 3.4% in April, posing a challenge for the Bank of Japan. This complicates their efforts to balance the risks of increased U.S. tariffs and rising prices, with the central bank anticipated to maintain steady interest rates during their upcoming meeting.