The USD/JPY is trading above ¥107.50 after having reached a high of ¥107.67. The upside move has a lot to do with the upbeat mood of US President Donald Trump, but there are other factors in play.
Five reasons to rise
1) TPP is back: Trump abandoned the Trans-Pacific Partnership in his first days in office. The other 11 nations including Japan and excluding China, continued the talks and reached a deal. Now, with the advice of Larry Kudlow, Trump reportedly wants to get back into the trade pact. Optimism about trade diminishes demand for the safe-haven Yen.
2) Lower US-China tensions: The world’s No.1 and No. 2 economies lowered the tone early in the week and now China provided a trust-building move of sorts. China’s trade balance for March showed a surprising deficit which was mostly due to seasonal reasons. More importantly, the figures showed a surge of Chinese imports from the US, something that will provide some comfort.
3) Syria: Tensions have been running high since the Assad regime bombed its citizens with chemical weapons on April 7th. The US vowed to retaliate and Russia, an ally of the Syrian government, responded with its own warnings. Now we have reports about US-Russian coordination. In addition, Trump hinted that an airstrike may not be imminent. This toning down hurts the Yen.
4) Kuroda reiterates loose monetary policy: The yen received a blow not only due to its role as a safe-haven currency. After some speculation that the Bank of Japan may begin withdrawing monetary stimulus in the Fiscal Year 2019, the Governor of the BOJ Haruhiko Kuroda stated that accommodative monetary policy is here to stay.