USD/JPY has posted small gains in the Thursday session. In North American trade, USD/JPY is trading at 107.37, up 0.13% on the day. On the release front, US unemployment claims ticked lower to 232 thousand, close to the estimate of 230 thousand. As well, the Philly Fed Manufacturing Index improved to 23.2 thousand, easily beating the estimate of 20.8 points. Later in the day, Japan releases National Core CPI, which is expected to tick lower to 0.9%. On Friday, Japan releases Tertiary Industry Activity, which is forecast to gain 0.1% after two straight declines.
The safe-haven yen often benefits from geopolitical crises, and the escalating tariff between China and the US could be a boon for the Japanese yen, if investors become unnerved by the spat which could hurt the global economy. After a lull in the trade battle between the two economic giants, another shot was fired this week. This time it came from China, which announced a tariff of some 179% on US sorghum crops, which is a livestock feed. China imports about $1 billion of sorghum annually, and if the tariff remains in place, will essentially halt US exports of sorghum to China. The Chinese government has threatened to impose tariffs on US soybean exports, valued at some $12 billion each year. If the US administration decides to retaliate, the specter of an ugly trade war between the US and China could spook investors and send global markets into a tailspin.
With the huge fluctuations that Bitcoin has exhibited in recent months, there has been plenty of press about cryptocurrencies. The proliferation of cryptocurrencies has led to discussions about central bank-issued digital currencies (CBDC), and their effect on the global financial scene. At a banking conference earlier this week, BoJ Deputy Governor Masayoshi Amamiya said that CBDC would have a negative impact on the current financial system, but added that cryptocurrencies could find a role with central banks, such as in payment and settlement transactions. Currently, the BoJ and ECB are involved in a joint initiative, Project Stella, which is examining the use of Blockchain in securities transactions.