Yen strengthens amid BoJ rate hike comments

Asian Markets

The Japanese yen surged to a nine-week high against the US dollar following a hawkish stance from the Bank of Japan (BOJ). BOJ board member Tamura advocated for raising interest rates to at least 1% by the end of 2025 fiscal year.

Meanwhile, the International Monetary Fund (IMF) has urged Japan to take immediate action on its fiscal health due to escalating risks from natural disasters and rising social security expenses. The IMF forecasts Japan’s public debt will hit 232.7% of GDP this year, with a slight increase in the primary deficit, projected to widen to 2.2%.

European Markets

EUR/USD struggles to break past 1.0400 as traders stay cautious ahead of the eagerly anticipated US labor market data. This caution supports the strength of the US Dollar, making it challenging for the euro to gain momentum. US Treasury Secretary Bessent has reiterated the commitment to a strong dollar policy, signaling no change in the government's debt issuance plans.

GBP/USD has been moving in a narrow range slightly above 1.2400, after a decline the previous day. The US dollar remains dominant across the board as markets await critical labor market data.

Commodities

Gold (XAU/USD) has maintained its intraday gains through the Asian session, staying near its all-time high reached earlier in the week. Ongoing concerns about US-China trade tensions continue to drive demand for safe-haven assets like gold.

On the energy front, West Texas Intermediate (WTI) crude oil is hovering around $70.35 early Friday, edging lower due to fears over a potential slowdown in global demand. China's recent move to impose retaliatory tariffs on US crude oil imports and a rise in US crude inventories for the second week in a row have added to the pressure on oil prices. The revival of trade tensions between the US and China is likely to weigh further on WTI, with concerns over weakening demand, especially from China, the world’s largest oil importer.