Dollar hits two-week high against yen as trade talks, Fed meeting loom

By Rocky Swift TOKYO (Reuters) -The U.S. dollar rose to a more-than-two-week high against the yen on Monday at the start of a packed week of global trade negotiations and central bank meetings.

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The Australian dollar climbed as signs of progress in trade talks between the U.S. and China bolstered demand for higher-yielding assets. The Japanese yen slid to record lows against the euro and Swiss franc. U.S. President Donald Trump is expected to meet Chinese President Xi Jinping in South Korea on Thursday, where the pair will decide on the framework of a trade deal hashed out over the weekend. And while Trump is travelling in Asia, the U.S. Federal Reserve is widely expected to cut its policy interest rate after moderate inflation figures on Friday.

“Looking ahead we think that dollar firmness is likely to remain in the near term,” Mahjabeen Zaman, head of foreign exchange research at ANZ, said on a podcast. “Fed cuts are fully priced in for October and December meetings. So if anything, any cautious communication from the Fed would likely be more supportive for the U.S. dollar.” The dollar rose 0.15% to 153.07 against the yen and touched 153.17, the strongest since Oct. 10. The dollar index, which measures the greenback against select peers, rose 0.05% to 98.97. The euro was steady at $1.1622, while the common currency strengthened to as high as 178.13 yen, an all-time high. The Swiss franc reached 192.25 yen, also a record. Sterling strengthened 0.04% to $1.3314. The Aussie gained 0.2% versus the greenback to $0.6528. In cryptocurrencies, bitcoin gained 1.6% to $115,157.36 and ether rose 3.3% to $4,198.69. U.S. Treasury Secretary Scott Bessent said trade talks on the sidelines of a summit of the Association of Southeast Asian Nations (ASEAN) in the Malaysian capital Kuala Lumpur have eliminated the possibility of the U.S. imposing 100% tariffs on Chinese imports starting November 1. Bessent also said he expects China to delay implementation of its rare earth minerals and magnets licensing regime by a year while the policy is reconsidered.

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 “We’ve obviously had a pretty risk-positive start to the week, given the weekend news on the various trade discussions,” said Ray Attrill, the head of foreign exchange research at National Australia Bank. “At the moment, I’d say positive risk sentiment is still, at the margin, playing negatively for the U.S. dollar.” Trump and Xi are due to meet on Thursday on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea, to sign off on trade terms. Ahead of that, Trump visits Japan from Monday and will hold a summit the following day with the nation’s new prime minister, Sanae Takaichi. FED RATE CUT PRICED IN; FOCUS ON CHAIR COMMENTS The Fed is widely expected to lower its current benchmark interest rate of 4% to 4.25% by another quarter percentage point when it decides on policy on Wednesday, a view supported by tamer-than-estimated inflation data on Friday. With that rate move already factored into asset prices, markets are likely to be more sensitive to any forward-looking language from Fed Chair Jerome Powell, with the central bank widely expected to cut rates further at its next meeting in December. In Japan, the central bank is likely to debate this week whether conditions are ripe to resume rate hikes as worries about a tariff-induced recession ease. Most analysts expect the Bank of Japan to keep its policy rate steady at 0.5% at the October 29-30 meeting. Prime Minister Takaichi has called for BOJ cooperation in achieving inflation driven more by gains in wages. (Reporting by Rocky Swift; Editing by Christopher Cushing and Muralikumar Anantharaman) (The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)