The Japanese yen rose in Asian trading on Tuesday against a basket of major and minor currencies, attempting to recover from its nine-month low reached earlier in the session against the U.S. dollar, as buyers stepped in at lower levels.

Bank of Japan Governor Kazuo Ueda will hold his first official meeting with newly appointed Prime Minister Sanae Takaichi later today, an event closely watched for potential signals regarding the timing of the central bank’s next rate-hike move.

Price Overview

The dollar fell about 0.25% against the yen to 154.82¥, down from the opening level of 155.17¥, after touching a high of 155.38¥—its strongest since February.

The yen ended Monday’s session down 0.4% against the dollar, marking a second straight day of losses after data showed the Japanese economy contracted in the third quarter.

Takaichi–Ueda Meeting

The first official meeting between Prime Minister Sanae Takaichi and BOJ Governor Kazuo Ueda begins at 06:30 GMT, a discussion expected to play a pivotal role in shaping Japan’s monetary-policy outlook for the coming months.

The meeting comes as Japan grapples with an economic contraction and a sharply weaker yen, which recently hit a nine-month low against the U.S. dollar, while debates intensify over the path of interest rates in the world’s fourth-largest economy.

The two sides are expected to discuss the future of monetary policy, particularly the prospects of resuming rate hikes—something Ueda has hinted could happen soon—versus the government’s preference under Takaichi for a more expansionary, growth-focused approach that eases the burden on households and businesses.

The meeting will likely cover coordination efforts between the government and the Bank of Japan to manage rising inflation pressures, maintain financial stability, and avoid market disruptions, especially given global sensitivity to BOJ decisions as the operator of the world’s largest stimulus program.

Markets will be watching the outcome closely, as it may set the tone for yen trading and Japanese bond yields in the coming period.

Views and Analysis

Kesuke Tsuruta, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said delays in BOJ rate hikes could further weaken the yen and increase import costs, conflicting with Takaichi’s goal of boosting real wages.

Tsuruta added that discussions will likely focus on how specific the prime minister intends to be when calling on the BOJ to act in coordination with the government.

Japanese Interest Rates

Money-market pricing currently assigns about a 35% probability of a quarter-point BOJ rate hike in December.

Investors await further data on inflation, unemployment, and wage trends in Japan to reassess these expectations.

Most cryptocurrencies fell on Monday as risk appetite weakened amid renewed concerns about overstretched asset valuations, particularly in the technology sector.

Later this week, several key U.S. economic releases are due, most notably the September nonfarm payrolls report scheduled for Thursday.

This comes a day after the release of minutes from the Federal Reserve’s recent meeting, which resulted in a rate cut.

Meanwhile, Federal Reserve Vice Chair Philip Jefferson urged caution regarding further interest-rate reductions in the coming period.

Jefferson said he agreed with the October rate cut and noted that current monetary policy remains “somewhat restrictive,” suggesting there may still be room for additional easing.

Ethereum

In trading, Ethereum fell 2.2% to 3,003.8 dollars on CoinMarketCap as of 21:42 GMT.

The Canadian dollar fell against most major currencies on Monday following the release of weaker-than-expected inflation data.

Government data showed that Canada’s annual inflation rate eased to 2.2% in October, as gasoline prices declined, food inflation slowed, and mortgage-interest costs dropped below 3%, according to official figures released Monday.

The removal of the carbon tax on gasoline earlier this year continued to weigh on the annual pace of price increases in recent months. Excluding the effect of the carbon-tax repeal, the consumer price index rose 2.7% in October after 2.9% in September, according to Statistics Canada.

Analysts polled by Reuters had expected inflation to come in at 2.1% for October, down from 2.4% in September. On a monthly basis, they forecast a 0.2% increase. The monthly inflation print matched expectations.

Stable inflation readings were one of the main reasons the Bank of Canada signaled last month that it would pause rate cuts. A further slowdown in October is likely to reinforce its confidence in keeping the benchmark interest rate unchanged at 2.25% next month.

A steeper drop in gasoline prices during October pushed the annual decline in fuel prices to 9.4%, compared with a 4.1% drop in September.

Food inflation rises 3.4% in October

A slowdown in food-price growth — up 3.4% in October versus 4.0% in September — also contributed to the overall cooling in inflation. Despite moderating, food prices remain elevated and have exceeded the headline inflation rate for nine consecutive months, according to Statistics Canada.

Mortgage-interest costs, a key component of housing inflation, rose 2.9% year-over-year in October, the first time in more than three years that the increase fell below 3%.

However, rent inflation — another major housing component — accelerated for the second month in a row, rising more than 5%.

Due to price volatility and the effects of government tax changes, the Bank of Canada and economists closely watch core inflation indicators to assess underlying price trends.

One core gauge, the trimmed-mean CPI, eased to 2.9% in October from a downward-revised 3.1% in September. Another measure, the CPI-median — which tracks the middle component of the price basket — dipped slightly to 3.0% from 3.1%.

Andrew Grantham, senior economist at CIBC Capital Markets, wrote: “It will take a longer period of easing price pressures, along with signs that economic growth is slipping again, before the Bank of Canada resumes rate cuts.”

The Canadian dollar slipped modestly after the data, trading 0.11% lower at 1.4035 to the U.S. dollar (71.25 U.S. cents). Two-year government bond yields fell 0.3 basis points to 2.475%.

Price increases in October were driven mainly by higher costs for mobile-phone plans and insurance.

In trading, the Canadian dollar fell 0.2% against the U.S. dollar to 0.7117 by 19:42 GMT.

Australian dollar

The Australian dollar fell 0.6% against the U.S. dollar to 0.6495 by 19:43 GMT.

U.S. dollar

The U.S. dollar index rose 0.2% to 99.5 by 19:34 GMT, after touching a high of 99.5 and a low of 99.2.

There’s an old saying in Washington: never believe anything until it’s been officially denied. And now that David Sacks—dubbed the AI czar in the Trump administration—has declared that “there will be no federal bailout for AI,” we can begin speculating about what that bailout might look like when it happens.

It turns out that the chief financial officer of the AI giant OpenAI has already floated an idea of what such a rescue could involve. In a recorded interview with the Wall Street Journal, Sarah Friar said the sector would need federal guarantees to enable the massive investments required for the United States to lead in AI development and deployment. Friar later clarified her remarks in a LinkedIn post after Sacks reacted, saying she had “muddied” the point by using the word “backstop,” and that she meant that AI leadership would require government involvement. That aligns more closely with what she said in the WSJ interview.

You might wonder: why would the hottest industry in the world—flush with hundreds of billions in investor funding—need a federal rescue at all? Notably, AI expert and commentator Gary Marcus predicted ten months ago that the AI sector would seek a government bailout to compensate for overspending, poor commercial decisions, and massive future commitments it is unlikely to meet. For example, in a recent podcast hosted by one of OpenAI’s outside investors, CEO Sam Altman appeared uncomfortable when asked how a company with only 13 billion dollars in annual revenue and ongoing losses could meet 1.4 trillion dollars of spending obligations over the coming years. Altman did not actually answer the question.

So what justification might the AI industry craft to secure government support, loan guarantees, grants, or other forms of assistance? For years, one of the most reliable ways to get Washington’s attention has been to say some variation of “China is bad… China must be beaten.” And that’s exactly what Altman has been telling reporters. But that does not explain why OpenAI specifically should be the recipient of federal aid over any other company.

In what appears to be an attempt to contain the fallout, Altman wrote on X that OpenAI is not seeking direct federal support, then later explained how the government could provide indirect help by building numerous public data centers that could be leased to AI firms—allowing them to avoid bearing the full capital costs themselves.

Perhaps I’m mistaken, and what we’re seeing is not an early negotiation between the AI sector and Washington over what a bailout might look like. And lest anyone think this industry has operated so far without government help, the Associated Press notes that more than 30 U.S. states already offer incentives to attract data centers. Not everyone is pleased to have these facilities in their communities. These centers have driven up electricity costs as utilities and consumers compete with data centers for supply, while utility companies request funding to build additional capacity to power them. In effect, current electricity customers are underwriting the expansion of AI data centers by paying for new power plants and transmission lines.

The deeper problem is that AI, in its current form, appears constrained by structural limitations that will prevent it from taking over many human tasks and from being embedded in critical systems (because it makes too many mistakes). The extraordinary claims made by AI boosters are thoroughly dismantled in a lengthy critique by Ed Zitron.

I increasingly see AI as a boondoggle—a term that Dictionary.com defines as “a wasteful or pointless project carried out for political, commercial, or personal gain.” So far, the AI sector fits that definition quite well. But I’ll borrow a broader interpretation from Dmitry Orlov, author of Reinventing Collapse: a modern boondoggle should not only be useless, but ideally should also create additional problems that can only be solved by new, equally pointless projects—such as the need for massive new electricity capacity that may later prove unnecessary if AI turns out to be far less useful than advertised. The boosters say AI will have a massive impact on society. I agree completely—but not in the way they imagine.