Yen wobbles as traders process trade deal and political uncertainty
Market focus was on the yen on Wednesday, which traded choppily as traders weighed speculation about the future of Japanese Prime Minister Shigeru Ishiba against U.S. President Donald Trump's announcement of a trade deal with Japan.
The yen initially hit its strongest level since July 11 at 146.20 per dollar on the trade news but flipped to losses after reports Ishiba intends to step down next month following a bruising upper house election defeat.
Ishiba said the reports he had already decided to resign were "completely unfounded", and the yen recovered somewhat and was last steady on the day at 146.83 to the dollar.
The trade deal - which lowers tariffs on auto imports and spares Tokyo from punishing new levies - affects the yen both because of what it means for the economy and also the Bank of Japan, which has been cautiously raising interest rates.
Moves in other currencies were pretty muted due to the uncertainty around tariffs, as well as doubts about how currencies would react even if there were there any greater certainty.
The U.S. dollar has been one of the biggest losers since Trump announced sweeping tariffs on trading partners on April 2, weakness which continued as those duties were suspended to allow further negotiations, but which has petered out somewhat this month.
The euro was last down 0.1% on the day at $1.1744 but still near a four-year high it touched at the start of the month. Sterling was up a touch at $1.1354.
In contrast to the euro, European equities rallied on hopes the trade deal with Japan could pave the way for more deals, including with Europe.
Trump said negotiators from the European Union would be in Washington on Wednesday.
The European Central Bank meets on Thursday, but is unlikely to have a dramatic effect on the currency and is expected to hold rates steady.
Improved sentiment towards the global economy from the trade deal, as well as higher metal prices, boosted the Australian dollar, although sentiment remained cautious. The Aussie firmed 0.4% to $0.6581.
Source : Reuters
