The Japanese yen held steady on Wednesday despite continued turmoil in bond markets, sparking concerns over the fiscal position of the world's major economies. The US dollar, on the other hand, remained firm on upbeat consumer confidence data and hopes for more US trade deals.
The yen was little changed against the US dollar at 144.28, after falling 1% on Tuesday following a Reuters report that Japan was considering reducing its issuance of ultra-long-term bonds following a surge in bond yields in recent weeks. Demand at the country's longest-dated bond auction on Wednesday also fell to its lowest level since July.
According to Jane Foley of Rabobank, despite the current news flow being less favorable to the yen, there are signs that the market is starting to resist any further weakness in the yen against the US dollar. The yen has gained nearly 9% so far in 2025, driven by a weaker overall dollar and a flight to safety amid a volatile trade war with the US under President Trump.
The US dollar index, which measures the greenback's strength against a basket of six major currencies, rose 0.1% to 99.65 but is still down 8% for the year. The euro was flat at $1.1331 after falling 0.5% on Tuesday as dollar buying surged on signs of progress in trade talks and stronger-than-expected US consumer confidence data.
However, new orders for US-made capital goods fell the most in six months in April, reflecting the impact of tariff uncertainty. ING's Francesco Pesole said continued positive data was needed to restore confidence in US growth, amid lingering concerns about the fiscal deficit. He added that the dollar's declining trend and Trump's plans to weaken the greenback over the long term could limit the currency's rally.
