The U.S. dollar climbed to its strongest level in more than two weeks against the Japanese yen on Monday, as investors braced for a pivotal week of central bank meetings and high-level trade diplomacy across Asia.
Markets are focused on the U.S. Federal Reserve’s policy meeting midweek, where the central bank is widely expected to cut interest rates following signs of moderate inflation, while the Bank of Japan is likely to keep rates steady.
The dollar rose 0.1% to ¥153.03, touching ¥153.26 at one point — its highest since October 10. The dollar index, which tracks the greenback against six major peers, was little changed at 98.90. Meanwhile, the euro held steady at $1.163 but surged to a record ¥178.13, while the Swiss franc also hit a new peak of ¥192.27. Sterling edged up 0.1% to $1.3327, and the Australian dollar gained 0.4% to $0.6541 on optimism surrounding U.S.-China trade talks.
U.S. President Donald Trump is set to meet Chinese President Xi Jinping on Thursday on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea. The two leaders are expected to finalize the framework of a trade deal that negotiators from both sides developed over the weekend. Trump, who begins his Asia tour in Japan on Monday, will also meet Japan’s new prime minister, Sanae Takaichi, on Tuesday.
U.S. Treasury Secretary Scott Bessent said talks during the Association of Southeast Asian Nations (ASEAN) summit in Kuala Lumpur helped avert a looming escalation in trade tensions, confirming that Washington would not proceed with 100% tariffs on Chinese imports scheduled for November 1. Bessent also said Beijing is expected to delay its new rare earth minerals licensing regime by a year while reviewing the policy.
Financial analysts say the positive tone of the trade discussions has boosted investor appetite for riskier assets. “We’ve obviously had a pretty risk-positive start to the week, given the weekend news on the various trade discussions,” said Ray Attrill, head of foreign exchange research at National Australia Bank.
At home, the Federal Reserve is expected to trim its benchmark interest rate from 4% to 4.25% on Wednesday, a move already priced into markets. Analysts believe investors will pay closer attention to Chair Jerome Powell’s guidance on the outlook for future cuts, particularly with another reduction anticipated in December.
“Fed cuts are fully priced in for October and December meetings,” said Mahjabeen Zaman, head of FX research at ANZ. “Any cautious communication from the Fed would likely be more supportive for the U.S. dollar.”
In Tokyo, the Bank of Japan is expected to hold its policy rate steady at 0.5% when it meets later this week. While speculation persists over potential rate hikes next year, Prime Minister Takaichi has urged the central bank to support inflation driven by rising wages rather than imported costs.
