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AUD/JPY falls to near 90.00 as safe-haven demand boosts Japanese Yen

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AUD/JPY falls to near 90.00 as safe-haven demand boosts Japanese Yen

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New update 2025.04.22 16:52
AUD/JPY falls to near 90.00 as safe-haven demand boosts Japanese Yen

update 2025.04.22 16:52

  • AUD/JPY weakens as ongoing trade-related uncertainties and geopolitical tensions continue to drive demand for the safe-haven Japanese Yen.
  • Support for the JPY is further reinforced by growing expectations that the BoJ will raise interest rates again in 2025.
  • The Australian Dollar finds some support as investor sentiment toward US assets softens.

AUD/JPY continues to decline for a third consecutive session, hovering near 90.10 during European trading hours on Tuesday. Persistent trade-related uncertainties and geopolitical tensions are bolstering demand for safe-haven assets like the Japanese Yen (JPY), pressuring the cross lower. Additionally, growing expectations that the Bank of Japan (BoJ) may hike interest rates again in 2025 are lending further support to the JPY.

Japan's Economy Minister Ryosei Akazawa echoed Prime Minister Shigeru Ishiba's position on Tuesday, emphasizing that agriculture will not be compromised to shield the auto industry in ongoing US tariff talks. Meanwhile, Finance Minister Katsunobu Kato is set to visit Washington later this week to meet US Treasury Secretary Scott Bessent for discussions on currency policy.

In its quarterly report on regional economic conditions, the Japanese government maintained its overall outlook but flagged rising downside risks linked to US trade policy, according to Xinhua News Agency.

However, downside momentum in AUD/JPY may be limited as the Australian Dollar (AUD) garners support amid headwinds for the US Dollar (USD). Investor sentiment toward US assets has weakened following renewed criticism of Federal Reserve Chair Jerome Powell by President Donald Trump, raising concerns about the Fed's independence.

White House economic advisor Kevin Hassett said on Friday that Trump is exploring whether he can dismiss Powell, while Trump warned on Truth Social that economic growth could stall unless interest rates are cut. Market sentiment remains fragile as global trade negotiations remain at an impasse. China's firm stance in response to Trump's aggressive tariff measures continues to weigh on investor confidence.

US-China Trade War FAQs

Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.

An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China's economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.

The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.


Date

Created

 : 2025.04.22

Update

Last updated

 : 2025.04.22

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