FX.co ★ Japanese Yen Hits 2-Week High on Trade Deal Boost

On Thursday, the Japanese yen appreciated to over 146 per dollar, marking a two-week peak driven by increasing optimism over a newly signed trade agreement between the United States and Japan. This deal introduces a 15% tariff on Japanese exports to the US, a significant reduction from the previously imminent 25% tariff threatened by President Donald Trump. Additionally, broader market sentiment received a boost amid encouraging updates regarding US-EU trade negotiations. Domestically, Japan's economic growth in July was bolstered by a robust performance in the services sector, although there was a notable contraction in manufacturing activity. Despite these positive trends, the yen could face downward pressure due to escalating political uncertainties. There are circulating reports suggesting that Prime Minister Shigeru Ishiba may be contemplating resignation, although he has publicly refuted these claims. This speculation follows the ruling coalition's recent loss of its majority in the upper house during the weekend elections, which has sparked worries regarding the stability of political leadership.