The Japanese yen strengthened for a third consecutive session in Asian trading Thursday, reaching a three-week high against the U.S. dollar as investors flocked to safe-haven assets. The rally follows President Trump’s announcement of sweeping new tariffs targeting all trading partners, with base rates starting at 10% and escalating significantly for specific countries. Market sentiment deteriorated sharply as Trump framed the measures as an economic “declaration of independence,” accusing global partners of unfair trade practices that have harmed U.S. interests.
The yen’s advance coincided with a steep decline in U.S. Treasury yields, reflecting growing recession concerns and expectations for more aggressive Federal Reserve rate cuts. Benchmark 10-year yields fell to one-month lows as the tariff announcement prompted a broad reassessment of growth prospects across major economies. The currency’s gains were further supported by position adjustments ahead of key U.S. economic data releases that could provide additional clues about the Fed’s policy path.
Technical indicators suggest the yen may extend its rally if risk aversion persists, with traders closely monitoring potential retaliatory measures from affected nations. The simultaneous move into Japanese assets and U.S. government bonds underscores deep market concerns about the tariffs’ potential to disrupt global trade flows and economic stability. Market participants are particularly focused on how quickly the measures might filter through to corporate earnings and economic indicators in coming weeks.
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