SINGAPORE- The dollar hit a three-week high against the yen on Tuesday and was firm across the board after some strong US services data and cautious optimism on the tariff front.
President Donald Trump said not all of his threatened levies would be imposed on April 2 and some countries may get breaks, which helped the dollar and the mood on Wall Street overnight by soothing some fears about a possible slowdown in US growth.
The dollar was last up at 150.56, having pulled overnight above 150 yen. It rose to a three-week high of 150.92 yen in the Asia morning.
The lack of momentum in trading, however, showed market uncertainty about tariffs and pushing the dollar any higher.
“Until there is evidence of who’s going to be spared and to what degree with regards to reciprocal tariffs, I don’t think markets are particularly keen to jump the gun,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
“The nature of Trump tariffs is pretty mercurial. And arguably, the yen’s sensitivity to tariffs can potentially be large, so a defensive positioning against the backdrop of higher yields and a BOJ that is qualifying hawkishness seems to be a reasonable position to take.”
A strong services component in S&P Global’s flash US PMI figures pushed up US yields and coincided with weakness in Japan, where services and manufacturing were both in contraction.
The yen has been a laggard for weeks even as tariff and growth worries weighed on the dollar, until last week’s Federal Reserve meeting turned sentiment after the central bank indicated it was in no rush to cut interest rates.
