The Japanese yen declined in the Asian market on Friday against a basket of major and minor currencies, continuing its losses for the fifth consecutive day against the U.S. dollar. Trading near a two-week low, the yen is on track for its first weekly loss in a month under the watchful eye of Japanese authorities, as the Finance Minister renewed warnings against speculation in the foreign exchange market.

Investors remain focused on purchasing the U.S. dollar as the preferred alternative investment amid escalating tensions between the United States and Iran in the Strait of Hormuz, where both sides have exchanged control over vessels and oil tankers.

Data released today in Tokyo showed a rise in Japan’s core inflation for March; however, this increase was not sufficient to boost the probability of the Bank of Japan (BoE) raising interest rates next week.

Price Overview

- Japanese Yen Exchange Rate Today: The dollar rose against the yen by approximately 0.15% to (159.84¥), from today’s opening price of (159.64¥), after recording a low of (159.60¥).

- The yen ended Thursday's trading down 0.15% against the dollar, marking its fourth consecutive daily loss due to escalating U.S.-Iran tensions.

Weekly Trading

Throughout this week's trading, which officially concludes with price settlements today, the Japanese yen has fallen by approximately 0.8% against the U.S. dollar so far, positioned to incur its first weekly loss in a month.

Japanese Authorities

Japanese Finance Minister Satsuki Katayama reaffirmed her verbal warning on Friday regarding exchange market intervention, noting that authorities are capable of taking "decisive" action to counter speculation. This followed her statement yesterday that Japan enjoys "full freedom" to intervene, asserting that previous interventions were effective.

As authorities continue to combat yen weakness, Akihiko Yoko, chief analyst at MUFG Bank, stated that it is difficult to imagine a scenario where the yen drops sharply below the 160 level against the dollar in the near term.

The U.S. Dollar

The dollar index rose by more than 0.1% on Friday, extending gains for the fourth consecutive session and reflecting the continued ascent of the American currency.

This rise comes as investors prioritize the U.S. dollar as a safe haven, given that the U.S. and Iran remain deadlocked over the ceasefire, the blockade, nuclear issues, and control of the Strait. These disputes keep the strategic waterway effectively closed, threatening an energy sector shock that could damage global economies.

Skye Masters, head of markets research at National Australia Bank, noted: "Despite Trump's extension of the ceasefire, tensions remain high with Iran's refusal to reopen the Strait of Hormuz and the continued U.S. naval blockade, increasing the risk of prolonged supply disruptions."

Iranian War Updates

- Trump: Tehran wants to make a deal, but its leadership is in turmoil.

- Trump: We are in no rush for a deal, but if Iran does not want one, "I will end it militarily."

- Iranian President Masoud Pezeshkian described the U.S. blockade and threats as "main obstacles" to genuine negotiations.

- Pakistan continues its efforts to revive peace talks between the U.S. and Iran in Islamabad.

- Iran seized a new vessel in the Strait of Hormuz, challenging U.S. naval superiority.

Global Oil Prices

Global oil prices rose by more than 0.5% on Friday, maintaining gains for the fifth consecutive day. Prices are trading near two-week highs due to mounting fears of energy supply disruptions as the Strait of Hormuz remains closed to tankers. The rise in oil prices renews concerns over accelerating inflation, which may push central banks to raise interest rates in the near term.

Core Inflation

Data released today in Tokyo showed Japan's Core Consumer Price Index (CPI) rose by 1.8% in March, higher than market expectations of 1.7% and up from 1.6% in February. These figures indicate growing inflationary pressures on BoJ policymakers, potentially increasing the chances of Japanese rate hikes later this year.

Japanese Interest Rates

- Reuters reported that the BoJ is likely to refrain from raising interest rates next week, as the fading prospects of a near-term end to the Middle East war keep economic and price outlooks highly uncertain.

- Governor Kazuo Ueda has recently refrained from pledging an April rate hike due to the war's impact on economic projections.

- Market pricing for a 25-basis-point hike in April remains stable at around 10%.

Expectations for Japanese Yen Performance

Suzuki from Matsui Securities stated that intervention by Japanese authorities is unlikely unless the dollar/yen exchange rate exceeds its April 2024 high of 161.95. He added that even if yen weakness accelerates after next week's BoJ meeting, the central bank will likely start with verbal statements before resorting to actual intervention.

Tom Leigh, Chairman of BitMine Immersion Technologies, stated that he believes the price of Ethereum could eventually reach $250,000.

Specifically, Leigh endorsed the $250,000 price target featured in a new report by the "Etherealize" platform. The report highlights that Ethereum’s staking feature provides a yield similar to interest earned from a bank account, giving the currency a distinct use case compared to its rival, Bitcoin. Furthermore, researchers argue that Ethereum's Proof-of-Stake (PoS) model could offer stronger long-term network security compared to Bitcoin's mining mechanism.

Tom Leigh described the Etherealize report as a "fresh and comprehensive vision for the future of Ethereum," supporting its argument that the digital currency could benefit from elements not available in gold or Bitcoin, such as the staking mechanism and the network’s extensive utility.

The report estimates a total addressable market opportunity for Ethereum of approximately $31.5 trillion. Based on a circulating supply of 121 million coins, this equates to a theoretical price of nearly $250,000 per unit.

However, the report noted that Leigh has a direct interest in supporting this outlook, as BitMine is considered the world's largest institutional holder of Ethereum. BitMine's stock (BMNR) has declined by 28% this year, currently trading at $22.59 per share.

Brent crude prices jumped by more than 3% following a report from Israel's N12 channel stating that Iran's chief negotiator with the United States has submitted his resignation.

By 2:05 PM ET, Brent crude rose approximately 3% to reach $104.79 per barrel, while West Texas Intermediate (WTI) climbed over 3% to $95.95 per barrel.

According to the report, Iranian Parliament Speaker Mohammad Bagher Ghalibaf resigned from his position as Tehran’s top negotiator due to interference from the Iranian Revolutionary Guard Corps (IRGC).

While CNBC has not confirmed the report's validity, the possibility of IRGC intervention raises market fears of a more hardline stance from Tehran during negotiations with the United States.

Meanwhile, the flow of oil tankers through the Strait of Hormuz remains extremely low as the United States and Iran seek to impose mutual blockades during the ceasefire period.

Iran continues to demand that vessels obtain prior permission to cross the Strait. Conversely, U.S. President Donald Trump stated on Thursday that the United States has "total control" over the maritime passage, adding that ships require authorization from the U.S. Navy to pass.

The United States has been enforcing a blockade on Iranian ports since April 13.

The current period has also seen both the United States and Iran seizing vessels; Iran detained two cargo ships in the Strait on Wednesday, while the United States intercepted several Iranian oil tankers.

The Canadian dollar declined for the third consecutive day against its U.S. counterpart on Thursday as investors assessed ongoing trade restrictions in the Strait of Hormuz and data showing that rising oil prices pushed domestic producer prices higher last month.

The Canadian currency, known as the "loonie," was trading down 0.1% at 1.3680 CAD per U.S. dollar (equivalent to 73.10 U.S. cents), after moving within a range between 1.3661 and 1.3689.

Impact of Dollar Strength and Geopolitical Risks

Strategists at Scotiabank, Shaun Osborne and Eric Theoret, noted that domestic news and developments remain limited, pointing out that the Canadian dollar's intraday movements are primarily driven by the general trend of the U.S. dollar and overall market risk levels.

They added: "We expect limited gains for the U.S. dollar, with strong resistance in the 1.37 range, while support remains at 1.3625 before a potential decline toward 1.35 levels."

Meanwhile, the U.S. dollar index rose slightly against a basket of major currencies, supported by escalating tensions between the U.S. and Iran and stalled peace talks. This combination pushed oil prices higher and dampened investor risk appetite.

Oil Supports the Canadian Economy... With Inflationary Pressure

Prices for oil—one of Canada's most vital exports—rose by 1.5% to reach $94.37 per barrel.

Data revealed that producer prices in Canada increased by 2.4% in March compared to February, driven by higher costs for energy, petroleum products, and chemicals following the closure of the Strait.

Additionally, increased sales in the petroleum products, coal, and transportation equipment sectors contributed to a 3.5% month-on-month rise in manufacturing sales during March, according to preliminary estimates.

Anticipation of Bank of Canada Decisions

Retail sales data for February, scheduled for release on Friday, is expected to provide further insight into domestic economic performance ahead of the Bank of Canada’s monetary policy decision next week.

Investors are betting that the central bank will keep its key interest rate unchanged at 2.25%, with the possibility of a single rate hike before the end of the year.

Bond Movements

Canadian government bond yields declined across various maturities. The 10-year bond yield fell by 3.8 basis points to reach 3.454%, reflecting a flatter yield curve.