The Japanese yen rose in Asian trade on Friday against a basket of major rivals, while trying to recoup from four-week lows against the dollar on short-covering.

Despite the gains, the yen is still heading for the third weekly loss in a row as the odds of a BOJ interest rate hike in June receded, while global risk appetite improved alongside developments in trade talks with the US.

The Price

The USD/JPY price fell 0.3% today to 145.46, with an April 10 high at 146.18.

Weekly Trades

Across the week, the yen is down 0.5% so far on the dollar, on track for the third weekly loss in a row.

Japanese Rates

The Bank of Japan expects inflation to hit 2% by the second half of 2026, nearly a year after its previous estimates in January.

BOJ Governor Kazuo Ueda said the timing for achieving the 2% inflation target will be delayed somewhat.

Thus the odds of a BOJ 0.25% interest rate cut in June stood below 25%.

Trade Developments 

The US and the UK announced a new trade agreement, the first of its kind with the new US administration.

According to the deal, the 10% base reciprocal tariffs on UK goods will continue, but 25% tariffs on British cars will be reduced to 10%, while 25% tariffs on UK steel and aluminum will be scrapped.

The UK will reduce tariffs on a range of US goods from 51% to 1.8%, while raising beef and ethanol imports from the US by $5 billion a year.

Following the announcement of the deal with the UK, Trump said he expects negotiations with China by the end of this week, which could lead to a reduction in the 145% China tariffs.

US Treasury Secretary Scott Bessent is scheduled to meet Chinese trade officials on Sunday in Switzerland to conduct negotiations.

The US administration might reduce tariffs on Chinese imports by over a half according to the New York Post’s sources.

Gold prices fell on Thursday as the dollar rose against most major rivals while investors shunned the precious metal as a haven demand following the announcement of the US-UK trade deal.

The risk appetite rebounded strongly in the markets as trade tensions receded with the US reaching a trade agreement with Britain.

Recent US data showed unemployment claims fell by 13 thousand today to 228 thousand in the week ending May 3, while analysts expected 230 thousand.

In a step that wasn’t surprising, the Fed decided to maintain interest  rates unchanged at below 4.5%, due to ongoing economic uncertainty.

The statements asserted the FOMC continues to monitor risks closely, and believes that unemployment and higher inflation risks are on the upside.

The statement hinted that tariffs threaten higher prices and could slow growth, which opens the door to the scenario of inflationary recession.

Trump described Powell as a “fool” and insisted that energy and oil prices alongside most other products have fallen with inflation barely there, and once again demanded a rate cut.

Otherwise, the dollar index rose 1% as of 18:57 GMT to 100.6, with a session-high at 100.7, and a low at 99.6.

On trading, gold spot prices rallied 2.3% as of 18:58 GMT to $3312.5 an ounce.

US stock indices rose on Thursday after the US and the UK announced a major trade deal, and following the Federal Reserve’s policy meeting. 

The risk appetite rebounded strongly in the markets as trade tensions receded with the US reaching a trade agreement with Britain.

Recent US data showed unemployment claims fell by 13 thousand today to 228 thousand in the week ending May 3, while analysts expected 230 thousand.

In a step that wasn’t surprising, the Fed decided to maintain interest  rates unchanged at below 4.5%, due to ongoing economic uncertainty.

The statements asserted the FOMC continues to monitor risks closely, and believes that unemployment and higher inflation risks are on the upside.

The statement hinted that tariffs threaten higher prices and could slow growth, which opens the door to the scenario of inflationary recession.

Trump described Powell as a “fool” and insisted that energy and oil prices alongside most other products have fallen with inflation barely there, and once again demanded a rate cut.

On trading, Dow Jones rose 0.6% as of 15:35 GMT, or 259 points to 41,371 points, while S&P 500 added 0.6%, or 33 points to 5664 points, as NASDAQ rallied 0.7%, or 131 points to 17,868 points.

Oil prices rose over 1% on Thursday on hopes for a trade deal between China and the US, the two biggest oil consumers worldwide. 

Brent futures rose 86 cents, or 1.4% to $61.98 a barrel, while West Texas crude prices rose 97 cents, or 1.7% to $59.03 a barrel as of 11:20 GMT.

SEB analysts note that as the markets settle above $61 a barrel, it provides strong support, accompanied by optimism on tariffs as the US and China prepare to commence talks.

US Treasury Secretary Scott Bessent will meet senior Chinese officials on May 10 in Switzerland to discuss a potential end to the trade war, which would boost fuel demand. 

Conversely, OPEC+ continue to increase their oil output, heaping pressure on prices.

City Research analysts reduced their outlook  for three-month Brent price to $55 a barrel from $60, but kept long-term forecasts at $60 this year.

They believe that a US-Iran nuclear deal could push Brent towards $50 a barrel, as supplies flood the markets, but failure to reach a deal would boost prices to over $70.

The Energy Information Administration reported a drop of 2 million barrels in US crude stocks last week to 438.4 million barrels, while analysts expected a drop of 1.3 million barrels.

Gasoline stocks rose 0.2 million barrels to 225.7 million barrels, as distillate stocks fell 1.1 million barrels to 106.7 million barrels.