USD/JPY Forecast August 5-9 – Yen soars as Trump vows new tariffs on China

USD/JPY fundamental movers

Late in the week, U.S. President Trump announced new tariffs on Chinese products, shaking financial markets and sending the safe-haven yen sharply higher. With trade negotiations between the U.S. and China at a standstill, the U.S. announced new tariffs of 10% on an additional $300 billion worth of Chinese goods. The move is scheduled to take effect on September 1, and China has vowed to retaliate.

The Federal Reserve pressed the rate trigger last week, as the Fed lowered rates for the first time in 10 years. The key question facing investors is whether the move is a “one and done” or is there more easing to come? Clearly, Fed Chair Jerome Powell clearly didn’t want to tip his hat too much in his press conference, but his comment that the cut was a “mid-cycle adjustment to policy” seemed to hint against further easing in the near future. This perception sent the U.S. dollar higher, while stocks headed south. Elsewhere, U.S. employment numbers were a mix. Wage growth improved by 0.3%, above the forecast of 0.2%. However, nonfarm payrolls slipped to 164 thousand, down sharply from 224 thousand a month earlier.