The Japanese yen declined on Friday during Asian trading against a basket of major and minor currencies, extending losses for a second consecutive session versus the US dollar and pulling away from its two-week high, as correction and profit-taking pressures persist.

This retreat follows data showing a slowdown in core inflation in Tokyo, easing price pressures on policymakers and reducing the likelihood of a rate hike by the Bank of Japan in next week's meeting.

Despite the decline, the yen remains on track to post a weekly gain amid ongoing political uncertainty in Japan, especially after the ruling party’s defeat in the upper house elections.

The Price

• USD/JPY rose by 0.35% to ¥147.49 as of today’s session open at ¥146.99, marking a low of ¥146.94.

• On Thursday, the yen fell 0.35% against the dollar — its first loss in four days — following correction-driven selling after touching a two-week high of ¥145.85 earlier in the session.

Tokyo Core Inflation Slows

Data released Friday showed Tokyo’s core consumer price index rose by 2.9% in July — the slowest pace since March — below market expectations of a 3.0% rise and down from 3.1% in June.

This deceleration significantly reduces inflationary pressure on the Bank of Japan, diminishing the likelihood of further rate hikes this year.

BOJ Rate Outlook

• Following the data, market pricing for a 25-basis-point rate hike by the BOJ in next week’s meeting dropped from 35% to below 20%.

• Deputy Governor Shinichi Uchida stated that the trade deal signed with Washington on Tuesday reduced economic uncertainty in Japan.

• His remarks fueled market optimism over the potential for resumed rate hikes later this year in the world’s fourth-largest economy.

Weekly Performance

As of the final day of the week, the yen is up approximately 0.9% against the dollar, poised to record its first weekly gain in three weeks.

Political Developments

Japanese Prime Minister Shigeru Ishiba denied reports of a pending resignation following a landslide electoral defeat for the ruling party.

“I shared a strong sense of crisis with former prime ministers, but I have not discussed resignation at all,” Ishiba stated.

Analyst Commentary

• Carol Kong, currency strategist at Commonwealth Bank of Australia, said: “The yen will continue to face headwinds amid lingering political uncertainty.”

• “We still don’t know what Prime Minister Ishiba plans to do… so there's ongoing ambiguity regarding fiscal outlook and BOJ policy,” she added.

Major US-Japan Trade Deal

On Tuesday, US President Donald Trump announced the signing of a “massive” trade agreement with Japan, featuring reciprocal 15% tariffs on Japanese exports to the US and a reduction in auto tariffs from 25% to 15%.

In a Truth Social post, Trump called the deal “perhaps the largest ever,” noting Japan will invest $550 billion in the US, while America will secure 90% of the profits.

The deal includes opening Japanese markets to US exports — particularly autos, trucks, rice, and other agricultural products — which Trump claimed will create “hundreds of thousands of jobs.”

Prime Minister Ishiba confirmed the reduction of US auto tariffs to 15%, describing it as a crucial step given the automotive sector’s dominant role in Japanese exports to the US, accounting for 28.3% of shipments in 2024.

Japan’s auto exports (including cars, buses, and trucks) to the US fell by 26.7% in June after a 24.7% decline in May.

Total exports to the US — Japan’s second-largest trading partner — amounted to ¥10.3 trillion ($70.34 billion) from January to June, down 0.8% year-on-year.

Most major cryptocurrencies climbed on Thursday, supported by improving risk sentiment following positive developments in global trade talks involving the United States.

Trade tensions eased after the US and Japan reached a tariff agreement, alongside encouraging signals of progress in negotiations between the US and the European Union.

Adding to market focus, President Donald Trump announced plans to visit the Federal Reserve later today — a rare and confrontational move in his ongoing pressure campaign against Fed Chair Jerome Powell. This would be the first visit of its kind by a sitting US president in nearly two decades.

Meanwhile, a private survey by S&P Global revealed a notable pickup in US business activity. The composite PMI rose to 54.6 in July’s preliminary reading from 52.9 in June — the highest level in seven months. The services PMI also jumped to 55.2 from 52.9, while the manufacturing PMI fell to 51.2 from 53.1, signaling slower output growth.

In labor data, the US Department of Labor reported that jobless claims remained low, with initial unemployment claims falling to 217,000 for the week ending July 19 — a drop of 4,000 from the previous week and better than expectations of 227,000.

Ethereum

As of 20:51 GMT, Ethereum (ETH) was up 3.9% on CoinMarketCap, trading at $3,746.1.

The Canadian dollar declined against most major currencies on Thursday, following the release of disappointing economic data.

Official figures revealed that Canada’s retail sales index fell by 1.1% in May, surpassing analysts’ expectations of a 0.9% decline.

Excluding volatile components such as energy and food, core retail sales dropped by 0.2%, in line with market forecasts.

As of 19:58 GMT, the Canadian dollar had fallen 0.3% against its US counterpart, trading at 0.7330.

Australian Dollar 

The Australian dollar remained stable against the US dollar, trading at 0.6601 as of 19:59 GMT.

Government data showed that Australia’s manufacturing PMI rose to 51.6, while the services PMI climbed to 53.8.

US Dollar 

The US dollar index rose by 0.2% to 97.3 at 19:42 GMT, reaching an intraday high of 97.5 and a low of 97.1.

President Donald Trump announced plans to visit the Federal Reserve headquarters later today, escalating his pressure campaign on Fed Chair Jerome Powell. The visit would mark the first by a sitting US president to the central bank in nearly two decades.

Meanwhile, a private survey by S&P Global showed that the US composite PMI for output rose to 54.6 in July’s preliminary reading from 52.9 in June, marking a seven-month high.

The services PMI increased to 55.2 from 52.9, while the manufacturing PMI declined to 51.2 from 53.1, signaling a slowdown in production.

The Trump administration on Wednesday revealed its comprehensive artificial intelligence (AI) plan—a sweeping set of initiatives and policy recommendations aimed at securing America's dominance in a field expected to reshape the global economy as profoundly as the internet once did.

The plan, which has been warmly received by Silicon Valley, centers on reducing regulatory barriers to AI development—except for one key exception aligned with Trump’s "America First" agenda: eliminating what it calls "political bias" in AI systems.

Outlined across three core pillars, the strategy seeks to:

- Accelerate innovation,

- Expand domestic AI infrastructure,

- And make U.S. software and hardware the global standard for AI technologies.

A 28-page policy document released Wednesday recommends that any large language models procured by the federal government be “objective and free from ideological bias.”

The initiative marks the latest move by Trump to boost AI infrastructure and investment in the U.S., and reflects the administration’s strategic priority to outpace China in the AI race.

“We are now in a global race to lead in AI,” said David Sacks, the White House’s so-called “AI Czar,” during a press briefing. “This is a revolutionary technology with massive implications for both the economy and national security. America must remain the dominant force.”

The announcement preceded Trump’s keynote speech at the "Winning the AI Race" event in Washington, hosted by the All-In Podcast and the Hill & Valley Forum, co-founded by former U.S.-China Security and Economic Review Commissioner Jacob Helberg alongside prominent tech investors.

“Whether we like it or not, we are now engaged in a high-stakes race to build and shape this pioneering technology that will define much of civilization’s future,” Trump declared at the event. “America started the AI race, and as President of the United States, I am declaring that America will win it.”

He emphasized slashing red tape that could hinder AI progress, likening the sector to a “beautiful newborn baby” that must be allowed to “grow and thrive without being smothered by politics or stupid rules.” He added, however, “I don’t even like the name ‘artificial intelligence’—I don’t like anything artificial.”

Action Plan Details

The strategy calls for eliminating bureaucratic hurdles that slow AI development, based on recommendations from the private sector, academia, and civil society. It also urges fast-tracking permits for data centers, semiconductor plants, and energy infrastructure.

The administration plans to work with U.S. tech companies to offer “integrated AI export packages”—bundling models, hardware, and software—for allied nations. The goal is to make U.S. technology the global benchmark, a long-standing demand from Silicon Valley to maintain American AI leadership.

Michael Kratsios, head of the White House Office of Science and Technology Policy, said all outlined policies could be implemented within six to twelve months.

As lawmakers and tech leaders continue to debate how best to regulate AI, the struggle to balance safety with rapid innovation intensifies.

After taking office, Trump revoked a sweeping executive order by former President Joe Biden that had imposed certain restrictions on AI development and use.

On July 1, the U.S. Senate voted to remove a provision from a broader bill that would have blocked individual states from enacting their own AI-related laws for ten years.

Tech leaders opposed the provision, citing fears of fragmented regulations that could hinder innovation. Critics of its removal argue that preventing state-level action could delay efforts to ensure AI safety and accountability.

The AI plan recommends that federal funding for related programs take into account each state’s regulatory climate.

At the Washington event, Trump stated: “We need uniform federal standards—not 50 different states regulating this industry in 50 different ways. No single state should be able to set the bar so high that it stalls progress.”

AI Investment Momentum

Wednesday’s plan builds on a wave of private-sector AI investments and announcements during Trump’s second term.

On July 15, Trump announced over $90 billion in investments from firms in tech, energy, and finance aimed at transforming Pennsylvania into an AI hub.

He also launched a $500 billion national AI infrastructure initiative dubbed “Stargate”—a collaboration with OpenAI CEO Sam Altman, SoftBank Chairman Masayoshi Son, and Oracle Chairman Larry Ellison.

Additionally, Trump pledged to lift Biden-era export controls on AI chips, recently allowing Nvidia to resume H20 chip sales to China.

Broader efforts are also underway to pressure tech firms to expand operations within the U.S. as part of a reshoring push to create jobs and reduce reliance on China—though experts remain skeptical of the long-term feasibility.

Trump has cited investments from companies like Apple and TSMC as policy wins, even though some of them were planned prior to his term.

The first six months of Trump’s second term have seen heavy tech industry engagement at the White House, with a shared mission: staying ahead of China in AI.

The launch of DeepSeek’s affordable, high-performance R1 model in China earlier this year rattled Silicon Valley, prompting faster moves from the U.S. administration.

The debate over how to maintain AI dominance while ensuring safety has returned to the spotlight in Congress. In May, leaders from Microsoft, OpenAI, and AMD testified before the Senate.

Microsoft Vice Chair Brad Smith said during the hearing: “The number one factor that will determine whether the U.S. or China wins this race is: whose technology becomes more widely adopted around the world.”