The U.S. dollar rose to a more than two-week high against the yen on Monday at the start of a packed week of global trade negotiations and central bank meetings.
U.S. President Donald Trump visits Japan from Monday and will hold a summit the following day with the nation’s new prime minister, Sanae Takaichi.
Soon after, Trump will meet Chinese President Xi Jinping on Thursday where the pair will decide on the framework of a trade deal that their respective officials hashed out on Sunday.
And while Trump is travelling Asia this week, the U.S. Federal Reserve is widely expected to cut its policy interest rate after moderate inflation figures on Friday.
“Looking ahead we think that dollar firmness is likely to remain in the near term,” Mahjabeen Zaman, head of foreign exchange research at ANZ, said on a podcast. “Fed cuts are fully priced in for October and December meetings. So if anything, any cautious communication from the Fed would likely be more supportive for the U.S. dollar.”
The dollar strengthened 0.2% to 153.12 against the yen, the highest since Oct. 10. The dollar index, which measures the greenback against select peers, was little changed at 98.94.
The euro was steady at $1.1628 while the common currency strengthened to as high as 178.13 yen, an all-time high. Sterling strengthened 0.05% to $1.3316.
The Australian and New Zealand dollars climbed along with gains in regional shares. The Aussie strengthened 0.3% to $0.6535 and the kiwi added 0.2% to $0.5761.
In cryptocurrencies, bitcoin gained 1.4% to $114,921.04 and ether climbed 2.5% to $4,167.08.
U.S. Treasury Secretary Scott Bessent said trade talks on the sidelines a summit of the Association of Southeast Asian Nations (ASEAN) in Malaysian capital Kuala Lumpur have eliminated the possibility of the U.S. imposing 100% tariffs on Chinese imports starting November 1.
Bessent also said he expects China to delay implementation of its rare earth minerals and magnets licensing regime by a year while the policy is reconsidered.
Trump and Xi are due to meet on Thursday on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea, to sign off on trade terms.
FED RATE CUT PRICED IN; FOCUS ON CHAIR COMMENTS
The Fed is widely expected to lower its current benchmark interest rate of 4% to 4.25% by another quarter percentage point when it decides on policy on Wednesday, a view supported by tamer-than-estimated inflation data on Friday.
With that rate move already factored into asset prices, markets are likely to be more sensitive to any forward-looking language from Fed Chair Jerome Powell, with the central bank widely expected to cut rates further at its next meeting in December.
In Japan, the central bank is likely to debate this week whether conditions are ripe to resume rate hikes as worries about a tariff-induced recession ease.
Most analysts expect the Bank of Japan to keep its policy rate steady at 0.5% at the October 29-30 meeting. Prime Minister Takaichi has called for BOJ cooperation in achieving inflation driven more by wage gain.
(Reporting by Rocky Swift)
