On Wednesday, the euro dipped against the yen—a two-day slide that saw prices fall under 177.00 while markets in Asia were open. With the Bank of Japan set to reveal its plans tomorrow, traders shifted toward safer bets, bolstering the yen.
Most believe Japan’s central bank will hold steady on rates, yet conversations regarding when they might raise them are likely, considering ongoing price increases. With fewer worries about tariffs lately, officials now have a bit more flexibility concerning how quickly – or slowly – they adjust financial policy.
The Yen gained ground as America’s top financial official, Scott Bessent, encouraged the Japanese government to give its central bank leeway to hike interest rates – he warned that keeping rates too low for too long could weaken the currency. Meanwhile, President Trump and Prime Minister Takaichi got together, pledging closer collaboration between their nations alongside fresh deals concerning commerce and vital resources.
Across Europe, people anticipate a little less price growth. Their expectation for increases over the next year dipped from 2.8% to 2.7% by September. However, forecasts for the following three years remained at 2.5%. Because longer-range inflation predictions didn’t change, coupled with consistent job market estimates, the ECB likely won’t alter course anytime soon.
Traders are hesitant, watching the Bank of Japan for signals about where the Yen will go—also, how willing everyone is to take risks generally.
