The U.S. dollar hit a three-week high against the yen on Tuesday after U.S. President Donald Trump announced that he had forged a “good relationship” with Kim Jong Un, North Korea’s leader. The meeting was a historic event that served as a starting point for ending the nuclear standoff between the countries. “We will have a terrific relationship – I have no doubt,” Trump said of his meeting with Kim Jong Un. The meeting took place in private, with only translators present with the two world leaders.
The dollar hit as high as 110.495 on Tuesday before retreating slightly. It was trading up 0.28 percent to 110.33 as of 1:33 p.m. HK/SIN. The yen is largely considered to be a safe haven currency, and it often declines in times of political optimism. Nevertheless, it should be understood that any real progress could take months to evolve.
Traders are also looking towards the two-day Federal Reserve policy meeting that begins today, after which it is widely expected that the central bank will raise interest rates. A bigger question is whether the Fed will raise rates four times this year or only three, and traders will be looking for hints in the post-meeting announcements.
The Bank of Japan will also be holding a two-day policy meeting this week, which is scheduled to end on Friday. The BOJ is expected to keep it current loose monetary policy stable. In addition to falling against the dollar, the yen declined against the Australian dollar and the euro. It was last trading at 129.81 and 84.01 respectively.