The US Dollar (USD) turned lower on Tuesday, hovering just above the 152.00 mark, as renewed trade tensions between the US and China weighed on sentiment. Meanwhile, political uncertainty in Japan has added fresh support to the Japanese Yen (JPY).
Dollar eases as US-China tensions flare up again
USD/JPY was unable to sustain gains above Monday’s peak at 152.35 and pulled back amid renewed trade concerns. News that the US and China have raised fees on each other’s cargo vessels has reignited fears of an escalation in their trade dispute, threatening to derail the fragile truce that had started to form in recent weeks.
On Monday, US Treasury Secretary Scott Besewent had calmed markets by announcing a planned meeting between US President Donald Trump and Chinese President Xi Jinping at the end of October, which initially raised hopes of de-escalation following Trump’s earlier threat to impose 100% tariffs on Chinese imports.
However, China’s Commerce Ministry responded Tuesday by urging Washington to “correct its mistakes,” emphasizing that current measures are harming global supply stability, even as Beijing reiterated its willingness to engage in dialogue.
Japanese political turmoil supports the yen
In Japan, the collapse of the ruling coalition has cast doubt over the position of the newly elected LDP leader, Sanae Takaichi. Market participants view the political impasse as likely to stall aggressive fiscal expansion plans, reducing prospects for yen weakness tied to pro-stimulus policy.
With investors reassessing Japan’s political landscape, the yen found additional support, limiting the USD/JPY’s ability to extend gains beyond the 152.00 threshold.
