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What’s happening: The Japanese yen recorded gains against the US dollar for the third straight trading session on Tuesday.
What happened: The yen continued to gain today as well, with markets fully pricing in an interest rate hike by the Bank of Japan this year.
Concerns around US President Donald Trump’s frequent shifts in trade policies also provided a boost to the safe-haven yen.
Why it matters: The Bank of Japan issued a statement in a cautious tone last week, cutting its inflation and growth projections, which lowered speculations of an interest rate hike in June. However, the BoJ reiterated its commitment to continue increasing rates if the economy and inflation remain on track.
Meanwhile, the US Federal Reserve has kept its policy rate unchanged in the 4.25%-4.50% range since December. The US central bank is projected to hold rates at its upcoming meeting on Wednesday.
On the other hand, rapid shifts in the Trump administration’s policy stance kept investors on edge. In his latest move, the US President warned to impose 100% tariffs on movies produced overseas. The latest tariff threats have reignited growth concerns in the US despite signs of easing trade tensions with China.
The Trump administration said that it is in talks with certain countries, including China, with some trade deals expected to be announced this week.
Data released this morning showed the au Jibun Bank Japan services PMI was revised higher to 52.4 in April, from a preliminary reading of 52.2. The figure represents the sixth consecutive month of expansion and a significant improvement from March’s 50.0. The au Jibun Bank Japan Composite PMI rose to 51.2 in April, from a flash reading of 51.1 and March’s 48.9.
The JPY/USD climbed 0.47% to 143.11 this morning. Despite the gains, the forex pair is down 8.95% year to date.
What to watch: Investors will continue monitoring tariff-related announcements from the US.
Minutes from the Bank of Japan’s monetary policy meeting, due to be released on Thursday, will also remain in focus.
Context: Shares of AMD rose in after-hours trading on Tuesday following the company’s better-than-expected results for the first quarter.
Details: AMD’s revenues grew 36% year-over-year to $7.44 billion in the first quarter, topping consensus estimates of $7.13 billion. The chipmaker reported adjusted earnings of 96 cents per share, surpassing Wall Street expectations of 94 cents per share.
The company said its datacenter sales surged 57% to $3.7 billion, beating expectations of $3.62 billion. However, gaming revenues contracted by 30% to $647 million.
“We delivered an outstanding start to 2025 as year-over-year growth accelerated for the fourth consecutive quarter, driven by strength in our core businesses and expanding data center and AI momentum,” said CEO Lisa Su said.
With AMD generating around a quarter of its total revenues from China, there are growing concerns around US tariffs hurting revenues in the remainder of the year. Management projected a revenue hit of $1.5 billion to its 2025 revenue due to new curbs on chips imposed by the US.
For the second quarter, the company guided to revenues around $7.4 billion, higher than market estimates of $7.24 billion.
How shares responded: AMD’s shares gained 1.8% to $100.40 in extended trading hours on Tuesday, following the release of quarterly results. The stock has climbed around 18% over the past month.
What to watch: Investors will continue monitoring announcements from the US regarding export curbs on AI chips and the trade tensions with China.
Other Markets: European indices closed mostly lower on Tuesday, with the DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.41%, 0.40% and 0.18%, respectively, and the FTSE 100 up by 0.01%.
The European Commission announced plans to ban all gas imports from Russia. The news sent the RUB/USD pair lower in forex trading this morning.
Indonesia’s residential property prices rose by 1.07% year-over-year in the first quarter, slowing from 1.39% in the previous quarter, which exerted pressure on the IDR/USD forex pair.
Philippines’ manufacturing production grew by 0.4% year-over-year in March. This marked a significant recovery from the 0.6% decline in the previous month and sent the PHP/USD pair higher in forex trading this morning.
Hong Kong’s S&P Global SAR PMI came in unchanged at 48.3 in April. This signalling contraction for the third month in a row exerted pressure on the HKD/USD forex pair.
The People’s Bank of China Governor Pan Gongsheng said the central bank plans to slash the reserve requirement ratio by 50 basis point, which sent the CNY/USD pair lower in forex trading this morning.
Italy’s retail sales (1200 UAE Time), UK’s S&P Global construction PMI (1230 UAE Time), Eurozone’s retail sales (1300 UAE Time), Singapore’s foreign exchange reserves (1300 UAE Time), US MBA mortgage applications (1500 UAE Time), EIA crude oil stocks change (1830 UAE Time), EIA gasoline stocks change (1830 UAE Time), EIA cushing crude oil stocks change (1830 UAE Time), EIA distillate stocks change (1830 UAE Time), EIA heating oil stocks change (1830 UAE Time), Fed interest rate decision (2200 UAE Time), Fed press conference (2230 UAE Time) and consumer credit change (2300 UAE Time), as well as Brazil’s industrial production (1600 UAE Time) and balance of trade (2200 UAE Time).
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