Yen gains as traders await clarity on U.S. tariffs

NEW YORK >> The safe-haven yen rose today, but was slightly softer against the dollar as uncertainty around U.S. tariffs kept traders mostly on the sidelines waiting for clarity on President Donald Trump’s trade policies.

The yen has been gaining ground and gold pushed to a fresh peak as investors shunned risk assets ahead of looming tariffs that have clouded the outlook for U.S. inflation and economic growth. “The only people trading today are those that have to, because it’s quarter-end (and) they have to rebalance. Everyone else is waiting for April 2 and then April 4 non-farm payrolls,” said Brad Bechtel, global head of FX at Jefferies in New York. Markets are nervous ahead of a new round of reciprocal levies that the White House is due to announce on Wednesday. Details are scarce, but Trump said late on Sunday that essentially all countries will be slapped with duties this week. The yen strengthened to 148.7 per U.S. dollar at one point today, but last traded at 149.815. The Japanese currency rallied 0.82% on Friday, when U.S. data showed core inflation rose more than expected last month, fuelling fears of stagflation. Gold pushed to an unprecedented $3,128.06 per ounce, marking three consecutive sessions in which it has registered record highs.

Along with tariffs, investors are in for a busy week with a string of economic reports, including jobs and payrolls data, that could shed much-needed light on how the U.S. economy is holding up under a second Trump presidency.

Federal Reserve Chair Jerome Powell and other central bank officials’ speeches this week also could offer clues on the path for U.S. interest rates.

“While equities are unequivocally focused on the growth impact from whatever is announced, FX markets seem to be holding their collective breath until some degree of clarity emerges,” said John Velis, head of Americas macro strategy at BNY Markets. The euro was down 0.35% at $1.0796, though it is set for a roughly 4.5% rise this quarter, its biggest jump since the third quarter of 2022, thanks to Germany’s fiscal overhaul. The likely implementation of U.S. tariffs means Europe will have to take better control of its future, European Central Bank President Christine Lagarde said today, reiterating the impact of tariffs and tit-for-tat measures on the bloc’s growth. Trump on Friday said he was open to carving out deals with countries seeking to avoid tariffs, but the Washington Post reported over the weekend he was urging his advisers to take a more aggressive stance. The U.S. dollar index, which measures the currency against six major peers, treaded water at 104.26. As tariffs roil the global economy, Goldman Sachs raised the probability of a U.S. recession to 35% from 20%. It also projected three interest rate cuts each from the Fed and ECB from, up from its previous expectation of two each. Elsewhere, the pound rose 0.12% to $1.2915 and is set for a nearly 3% monthly climb – its best showing since November 2023.

Britain still expects to be hit by global tariffs this week, although a British government spokesperson said Prime Minister Keir Starmer and Trump had “productive negotiations” towards a trade deal in a phone call on Sunday. The Canadian dollar eased to C$1.4379. Mexico’s peso slipped to 20.4258 per dollar. The Australian dollar fell 1.03% to $0.6224 today, ahead of the Reserve Bank of Australia’s (RBA) policy meeting on Tuesday.