USD/JPY hesitates above 152.00 as trade tensions dent US Dollar's strength

• The US Dollar turns lower and approaches 152.00 amid growing trade uncertainty.
• Higher fees on cargo vessels have reignited the Sino-US trade rift.
• In Japan, the collapse of the ruling coalition leaves the New LDP leader Takaichi without support.

The US Dollar has been unable to confirm above Monday's top at the 152.35 area on Tuesday and is trading with moderate lows a few pips above 152.00. Trade tensions with China and expectations that the next Japanese PM might need to rethink its pro-stimulus policy have provided a fresh impulse to the JPY.

A moderate risk aversion prevails on Tuesday as news that the US and China are raising fees on each other's cargo vessels has opened a new front in the Sino-US trade rift, threatening to derail their fragile truce.

US Treasury Secretary Scott Besewent had soothed markets on Monday, announcing a meeting between US President Trump and Xi Jinping at the end of October. The announcement had boosted hopes of a de-escalation of the tensions between the world's two major economies after Trump threatened 100% tariffs in retaliation for China's plans to restrict rare earths' trade.

Earlier on the day, China's Commerce Ministry affirmed that Beijing wishes to resolve differences with dialogue but also urged the US to correct its mistakes as, he said, their moves affect global supply stability.

Meanwhile, in Japan, the collapse of the ruling coalition is putting the nomination of the new LDP leader, Sanae Takaichi, in doubt. With Japan's political standstill already priced in, the lack of support for Takaichi's expensive economic policy has been welcomed by the market, and is providing additional support to the JPY.