Dollar Reaches Two-Week High Against Yen Amid Trade Talks and Fed Meeting

The U.S. dollar hit a two-week high against the yen as global trade negotiations and central bank meetings approach. Analysts expect the Federal Reserve to cut interest rates following moderate inflation data, while the Bank of Japan is likely to maintain its current policy. President Trump is set to meet with President Xi at the APEC summit to discuss trade terms.

The U.S. dollar rose to its highest level in over two weeks against the yen on Monday, coinciding with a week filled with significant global trade discussions and central bank meetings.

The Australian dollar also gained as optimism surrounding U.S.-China trade talks increased demand for higher-yielding assets. Meanwhile, the Japanese yen fell to record lows against both the euro and the Swiss franc.

U.S. President Donald Trump is expected to meet Chinese President Xi Jinping in South Korea on Thursday to finalize a trade framework discussed over the weekend. While Trump is in Asia, the U.S. Federal Reserve is anticipated to lower its policy interest rate, following the release of moderate inflation figures on Friday.

"In the near term, we expect the dollar to remain strong," said Mahjabeen Zaman, head of foreign exchange research at ANZ. "The Fed's rate cuts are priced in for October and December, and any cautious communication from the Fed may further support the dollar."

The dollar rose 0.1% to 153.03 yen, reaching a peak of 153.26, the highest since October 10. The dollar index, which measures the greenback against a basket of currencies, remained steady at 98.90.

The euro held at $1.163, while it strengthened to an all-time high of 178.13 yen. The Swiss franc also reached a record at 192.27 yen.

Sterling increased 0.1% to $1.3327, and the Australian dollar rose 0.4% against the U.S. dollar to $0.6541.

In the cryptocurrency market, bitcoin climbed 1.8% to $115,441.69, and ether surged 4% to $4,227.56.

U.S. Treasury Secretary Scott Bessent mentioned that trade talks on the sidelines of the ASEAN summit in Kuala Lumpur have reduced the likelihood of the U.S. imposing 100% tariffs on Chinese imports starting November 1. He also indicated that China might postpone its rare earth minerals licensing regime by a year for reconsideration.

Ray Attrill, head of foreign exchange research at National Australia Bank, noted, "We've had a positive start to the week due to the weekend's trade discussions. However, this positive sentiment may be slightly negative for the U.S. dollar."

Trump and Xi are scheduled to meet on Thursday during the APEC summit in Gyeongju, South Korea, to finalize trade terms. Before that, Trump will visit Japan and hold a summit with the new Prime Minister, Sanae Takaichi.

Many analysts predict the Fed will cut its benchmark interest rate from 4% to 4.25% by a quarter percentage point during its policy decision on Wednesday, in light of recent lower-than-expected inflation data.

As this rate cut is largely anticipated, markets will likely focus on any forward-looking comments from Fed Chair Jerome Powell, with further cuts expected at the December meeting. In Japan, the central bank may discuss the timing of potential rate hikes as concerns over a recession induced by tariffs diminish.