Australia, NZ dlrs rise over Trump comments; Yen before the BOJ continuously by Reuters
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SINGAPORE (Reuters) – The Australian and New Zealand dollars rose on Friday (yuan) in response to comments from U.S. President Donald Trump taking a soft stance on tariffs on China, with the yen on guard ahead of the Bank of Japan. BOJ) rate decision.
In an interview with Fox News on Thursday evening, Trump said he would prefer to use tariffs against China, saying he thinks they can reach a trade deal with the world’s second-largest economy.
Shortly after the comments, the Australian dollar rose 0.4% to a five-week high of $0.6310, while the New Zealand dollar similarly gained 0.42% to its highest since mid-December at $0.5700.
The two antipodean currencies are often used as liquidity proxies.
The Chinese yuan similarly rose on the back of Trump’s comments, with the offshore unit up roughly 0.3% to 7.2682 against the dollar.
The offshore counterpart was last up 0.23% at 7.2699 per dollar.
Elsewhere, the yen was little changed at 156.18 to the dollar, weakening near a one-week low hit in the previous session.
The BOJ will conclude its two-day policy meeting later and markets are priced 25-basis-point higher, with recent comments from BOJ officials suggesting such a move.
Japan’s currency rallied last week on expectations of a tolerable hike but gave up some gains as traders awaited further clarity on the BOJ’s policy outlook.
of T. “The BOJ may continue to raise rates,” said Vincent Chung, associate portfolio manager of Rowe Price’s diversified income bond strategy.
“We expect this initial increase in 2025 to be followed by a series of gradual hikes, which may bring the policy rate to 1% by the end of the year. The policy rate may exceed 1%, as this is close to the lower end of the BOJ’s neutral rate range.
Analysts said it would take a hawkish move from the BOJ to prevent the yen from falling again after Friday’s decision, with officials likely to announce further rate hikes in the future.
Underscoring expectations of rising borrowing costs on Friday, data showed that Japan’s core consumer prices rose 3.0% in December from a year earlier, marking the fastest annual pace in 16 months.
Dollar flash
In the broader market, the dollar was headed for its worst weekly decline in two months after Trump’s tariff announcement failed to materialize, unlike what Trump had threatened during his campaign.
The greenback is set to lose 1.4% against a basket of currencies, its biggest drop since November. It was last 0.23% lower at 107.89 on Friday.
The euro, meanwhile, rose 0.26% to $1.0443 and was heading for a 1.7% weekly gain. Sterling rose 0.21% to $1.2377 and was similarly set for a 1.5% gain for the week, snapping a third straight week of losses.
In addition, Trump’s comments on the dollar’s rise come amid calls for the Federal Reserve to cut interest rates, saying it would help set monetary policy better than those charged with doing so.
“Trump’s comments … are a reminder that we’re going to have a constant source of volatility, and of course, on paper, he’s a little bit against that Fed independence,” said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:).
Trump’s comments come just days before the Fed’s first policy meeting of the administration, with broad expectations that officials will leave rates unchanged.
In cryptocurrencies, Bitcoin was last up 0.26% at $103,359.72, while Ether gained 1.88% to $3,309.79.
Trump on Thursday ordered the creation of a cryptocurrency task force tasked with proposing new digital asset regulations and creating national cryptocurrency reserves.