The Japanese yen declined in the Asian market on Wednesday against a basket of major and minor currencies, resuming losses that had temporarily paused yesterday against the US dollar, and is on the verge of touching its lowest level in two weeks, amid negative pressure, particularly from the currently weak prospects for the Bank of Japan to raise Japanese interest rates in September.

The US dollar rebounded as markets digested key US inflation data, awaiting further solid evidence regarding the likelihood of Federal Reserve rate cuts in September and October.

Price Overview

•Today’s yen exchange rate: The US dollar rose against the yen by 0.2% to ¥148.17, from today’s opening price of ¥147.84, recording its lowest level at ¥147.70.

•The yen ended yesterday’s session up 0.2% against the dollar, its first gain in the last three days, after earlier hitting a two-week low at ¥148.52.

•Aside from buying at lower levels, the yen rose after the release of US headline inflation data for July that came in below expectations.

Japanese Interest Rates

•Minutes from the Bank of Japan’s June monetary policy meeting showed that some board members said the central bank would consider resuming interest rate hikes if trade tensions eased.

•Recently released inflation and wage data showed declining inflationary pressures on Japanese central bank policymakers.

•Market pricing for a quarter-point interest rate hike at the September meeting remains below 40%.

•To reprice these expectations, investors are awaiting further data on inflation, unemployment, and wages in Japan.

US Dollar

The US Dollar Index rose by about 0.1% on Wednesday, in an attempt to recover from a two-week low of 97.90 points, reflecting a rebound in the greenback against a basket of global currencies.

Aside from buying at lower levels, the dollar’s rebound came as trade tension concerns between the US and China eased, in addition to digesting Tuesday’s US inflation data.

Carol Kong, currency strategist at Commonwealth Bank of Australia, said: “The July CPI report showed less evidence of tariffs impacting prices… (but) I think a rate cut in September is not entirely certain, and perhaps not as certain as current market pricing suggests.”

According to CME Group’s FedWatch tool: Market pricing for a 25 basis point rate cut at the September meeting is currently steady at 94%, with a 6% probability of no change in rates.

To reprice these expectations, investors are awaiting key US data on Thursday and Friday, including producer prices, jobless claims, and monthly retail sales.

Ethereum’s price surged sharply on Tuesday, reaching its highest level in several years as the cryptocurrency attracted increased investment and inflows.

Exchange-traded funds (ETFs) focused on Ethereum saw unprecedented inflows on Monday, reflecting growing institutional interest and pushing the cryptocurrency closer to a new record high.

According to Farside Investors data, investors poured over $1 billion in cash into Ethereum ETFs on Monday, surpassing the previous single-day record of $726.6 million set in July.

The nine US-listed funds now collectively hold assets exceeding $10 billion. Of the approximately $1.019 billion in inflows on Monday, BlackRock’s iShares Ethereum Trust ETF captured the largest share, about $640 million.

Ethereum touched $4,000 on Friday for the first time since last December, then climbed Tuesday afternoon to over $4,500 — its highest since late 2021. According to CoinGecko, the cryptocurrency is up about 26% in seven days and more than 50% over the past 30 days, now only 8% away from its all-time high of $4,878 set in 2021.

Users on the Myriad platform widely expect Ethereum to set a new record this year, giving it an 89% probability of doing so at the time of writing. (Note: Myriad Markets is a product of DASTAN, which owns Decrypt.)

The rally itself may be drawing investors to Ethereum ETFs, which in turn could fuel further gains.

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, told Decrypt: “There was a moment where people saw the price going up and thought it was good.” He added, “Price reflects sentiment; if it goes up, people start inventing narratives.”

Balchunas noted that inflows into Ethereum funds have been “strong,” at a time when the cryptocurrency is becoming easier to understand thanks to growing interest in stablecoins. Last month, President Donald Trump signed the GENIUS Act, which establishes a regulatory framework for issuing these coins in the US.

“The narrative has become clearer with stablecoins,” Balchunas explained, noting that most ordinary people can grasp the idea of stablecoins and may like the concept of a digital dollar.

He credited Tom Lee of Fundstrat Global Advisors for shaping this narrative, highlighting Lee’s view that stablecoins are the best use case for Ethereum’s network — a perspective that has helped investors understand what sets the second-largest cryptocurrency by market value apart from Bitcoin and other major digital assets.

Lee has spoken frequently about Ethereum on CNBC, saying in June that the cryptocurrency was “coming back strong” and could be “the next Bitcoin,” with stablecoins as the “killer app” for its network. Although Lee is known for his long-term Bitcoin optimism, he now backs the treasury strategy of Nasdaq-listed BitMine Immersion, which is buying Ethereum heavily and currently holds $5 billion worth of it.

Other publicly listed companies and institutional investors have also begun buying the cryptocurrency. Ethereum entered traditional markets last year when the US Securities and Exchange Commission quietly approved ETFs that give investors exposure to its price.

Although these funds initially drew less interest compared to the historic launch of Bitcoin ETFs earlier in the year, they have seen increased adoption in recent months as Ethereum returns to the spotlight in the crypto market.

Ethereum’s network is used by developers to build crypto products, sometimes called decentralized applications or “dapps.” Stablecoins — now being developed by major banks and publicly traded companies — are described as faster, cheaper payment methods.

These digital tokens include USDC and Tether’s USDT, which often operate on Ethereum’s network.

Ethereum

In trading, Ethereum’s price jumped 8.6% to $4,587.5 at 21:25 GMT on CoinMarketCap.

The Australian dollar rose against most major currencies on Tuesday following a widely expected monetary policy decision.

The Reserve Bank of Australia on Tuesday cut the official cash rate by 25 basis points to 3.60% at its regular meeting, marking the third rate cut this year after reductions in February and May, and following a surprise pause in July that puzzled analysts and frustrated mortgage holders.

The decision was in line with broad market expectations, with futures pricing pointing to nearly a 100% probability of a cut, and all four major banks forecasting at least one more reduction before year-end. A Reuters poll conducted last week showed all 40 surveyed economists expecting a cut this week.

At the press conference following the meeting, Governor Michele Bullock said:

“The outlook suggests the cash rate may need to be a little lower than it is now to keep inflation falling and stable while supporting employment growth, but there remains a good deal of uncertainty. Therefore, the Board will continue to focus on the data to guide its decisions.”

Bullock confirmed the Bank did not discuss a cut larger than 25 basis points. Commonwealth Bank was the first to pass on the reduction to mortgage rates, followed by other banks.

Inflation Falls, Economy Slows

The RBA expressed satisfaction with the sharp decline in inflation, with the “trimmed mean” – its preferred core inflation measure – falling below 3% for the second consecutive quarter, a marked change from 2023 when inflation was well above target.

Headline inflation eased to 2.1%, comfortably within the 2%–3% target range, while the trimmed mean stood at 2.7%. The Bank noted:

“Inflation has declined substantially from its 2022 peak, with higher interest rates helping bring aggregate demand and potential output closer to balance.”

In contrast, data point to a clear slowdown in the economy; GDP grew just 0.2% in Q1 and 1.3% year-on-year, well below the Bank’s earlier forecasts. Unemployment rose to 4.3%, job ads fell, and household spending remained weak with flat retail sales and continued pessimism in consumer sentiment.

In its quarterly monetary policy statement, the Bank lowered its GDP growth forecast for December 2025 to 1.7% from 2.1%, citing weak consumer spending and lower business investment, indicating the need for more cuts to support growth.

Consensus on Early Action

Minutes from the July meeting showed a split decision at the time, with three members supporting a cut and six preferring to wait for more inflation data. Today, however, all nine members voted in favor of the cut, signaling the Bank is now more convinced of the need to act early to provide extra support rather than risk a deeper slowdown later.

More Cuts Expected

The Bank’s statement kept the door open for additional easing, noting the potential for further cuts if inflation remains under control and economic activity weakens.

Markets are betting on another 25-basis-point cut in November, with expectations that the cash rate will fall to around 3.35% by year-end. Major banks foresee continued easing, with NAB projecting 3.10% by February 2026 and Westpac seeing 2.85% by mid-2026, in agreement that today’s move will not be the last in this cycle.

In currency markets, the Australian dollar rose against the US dollar by 0.3% to 0.6531 as of 20:57 GMT.

Canadian Dollar

The Canadian dollar was steady against its US counterpart at 0.7258 as of 20:57 GMT.

US Dollar

The US dollar index fell 0.4% to 98.09 as of 20:24 GMT, after hitting a high of 98.6 and a low of 97.9.

Government data showed that the annual growth rate of the US consumer price index held steady at 2.7% in July, below expectations for a rise to 2.8%.

Core CPI – which excludes volatile food and energy prices – rose to 3.1% in July, above expectations for 3% and compared with 2.9% in June.

According to the FedWatch tool, investors see a 94% probability of a 25-basis-point rate cut in September, compared with 86% yesterday and 57% a month ago.

Analysts also see a 61% chance of another 25-basis-point cut in October, compared with 34% a month ago, plus a 51% probability of a similar cut in December, compared with 25% a month earlier.

The White House confirmed on Monday that Nvidia and AMD have reached an agreement to share 15% of their revenue from sales to China with the US government, a move that has sparked debate over its potential impact on the two chipmaking giants and whether Washington might pursue similar deals with other companies.

Under the agreement, the companies will receive export licenses to sell Nvidia’s H20 chips and AMD’s MI308 chips in China, according to the Financial Times.

In a statement to NBC News, Nvidia said: “We follow the rules set by the US government for our participation in global markets. While we have not shipped the H20 to China for months, we hope export control rules will allow us to compete with China both domestically and globally. America cannot repeat the 5G mistake and lose its leadership in communications. US technology infrastructure in AI can be the global standard if we compete.”

AMD confirmed in a statement that its initial export license applications for MI308 chips to China had been approved.

Analysts speaking to CNBC described these arrangements, set by President Donald Trump’s administration, as “unusual,” but reflective of the current White House’s transactional nature. Investors generally view the step as positive for both companies, as it secures renewed access to the Chinese market.

Impact on Nvidia and AMD

The H20 chip from Nvidia was designed specifically to meet US export requirements for China and was previously banned under export restrictions, but the company announced last month it expected to receive licenses to ship the product to China.

In July, AMD also said it would resume exports of MI308 chips. At that time, there was no indication that resuming sales to China would be conditional or tied to a revenue share, and markets welcomed the move as reopening a multi-billion-dollar sales opportunity.

Despite both companies’ shares closing slightly lower on Monday, Ben Barringer, global technology analyst at Quilter Cheviot, told CNBC: “From an investor’s perspective, the outcome remains positive – getting 85% of the revenue is better than nothing. The question is whether Nvidia and AMD will raise their prices by 15% to offset the levy, but ultimately it’s better to sell in the market than leave it entirely to Huawei,” their closest Chinese competitor.

However, uncertainty remains over their long-term future. George Chen, co-chair of digital practice at The Asia Group, said: “In the short term, the agreement gives both companies some certainty over their exports to China. In the long term, we don’t know whether the US government will seek a larger share of their China business, especially if their sales there continue to grow.”

Analysts told CNBC the deal is “unusual” but consistent with Trump’s style. Barringer said: “It’s a good but strange move, the sort you’d expect from President Trump, who is at heart a dealmaker. He’s willing to compromise – but only if he gets something in return, and that sets an unusual precedent.”

Neil Shah, a partner at Counterpoint Research, described the revenue share as “an indirect tariff at the source.” Daniel Newman, CEO of The Futurum Group, wrote on X that the move resembled “a tax” on doing business in China.

Other analysts believe such deals are unlikely to extend to other companies. Nick Patience, head of AI at The Futurum Group, said: “I don’t expect it to extend to other sectors equally critical to the US economy, such as software and services.”

The US views the semiconductor industry as a strategic technology, forming the backbone of many other tools such as AI, consumer electronics, and even military applications. This is why Washington has placed chips under an export control regime unlike any other product. Chen from The Asia Group said: “The semiconductor industry is unique, and the pay-to-enter approach may work in Nvidia and AMD’s case because it’s essentially about getting US government export approval. For companies like Apple and Meta, the situation is more complicated given the nature of their business models and services in China.”

How Might China Respond?

Semiconductors have become a highly sensitive geopolitical topic. Over the past two weeks, China has expressed concern over the security of Nvidia chips.

Late last month, Chinese regulators asked Nvidia to “clarify” reports of potential security vulnerabilities and “backdoors.” Nvidia denied the existence of any backdoors granting access or control over its chips. More recently, the company again denied backdoors in its H20 chips after allegations from a social media account linked to Chinese state media.

Trump’s deal with Nvidia and AMD is likely to elicit mixed reactions in China – Beijing will be displeased with the arrangement, but Chinese companies will still seek to acquire these chips to advance their AI ambitions. Shah from Counterpoint Research said: “For China, it’s a dilemma – it needs these chips to boost its AI ambitions, but the US revenue levy could make them more expensive, and there are concerns about US backdoors, especially as Washington has approved supplying these chips to Chinese companies.”