The Japanese yen declined in Asian trading on Thursday against a basket of major and minor currencies, deepening its losses for the fourth consecutive session versus the US dollar and hitting its lowest level in two weeks, amid strong demand for the greenback as the preferred investment option, especially after US inflation data strengthened expectations for additional Federal Reserve rate hikes this year.

This comes as US President Donald Trump and Chinese leader Xi Jinping begin their summit in the first official visit by a US president to China in nearly a decade, with markets closely watching discussions on strengthening trade ties between the worlds two largest economies, alongside complex geopolitical issues including the Iran war, the future of navigation through the Strait of Hormuz, and the impact on global energy markets.

Price Overview

Japanese yen exchange rate today: The dollar rose against the yen by 0.1% to (157.99), the highest level since April 30, from todays opening price at (157.85), and recorded a session low at (157.69).

The yen ended Wednesdays trading down 0.15% against the dollar, marking its third consecutive daily loss, after strong US producer price data.

US Dollar

The dollar index rose 0.1% on Thursday, maintaining gains for the fourth straight session and reflecting continued strength in the US currency against a basket of global currencies.

The dollar received additional support from rising US Treasury yields, as investors bet that the Federal Reserve will raise interest rates at least once this year.

Data released this week in the United States showed consumer prices in April rose at the fastest pace in three years, while producer prices recorded their strongest increase in four years, highlighting renewed inflationary pressures facing Federal Reserve policymakers.

According to the CME Groups FedWatch tool, markets are now pricing in a 31.8% probability of a Federal Reserve rate hike in December, compared to just above 16% a week ago.

Trump-Xi Meeting

Global attention is focused on Beijing, where the historic meeting between US President Donald Trump and Chinese President Xi Jinping is taking place, amid Washingtons efforts to secure economic gains and preserve the fragile trade truce between the worlds two largest economies, while also discussing complex geopolitical issues, most notably the US-Israeli war against Iran and its regional and global implications.

Trump is expected to seek Chinas help in pressuring Iran toward a peace agreement in the Middle East, though analysts believe he is unlikely to receive the level of support he wants.

Government Support

Kyodo News reported on Thursday that the Japanese government is considering preparing a supplementary budget to ease the burden on households from rising fuel costs, a move that could further pressure the countrys public finances.

According to unnamed government sources cited by Kyodo, the supplementary budget for the current fiscal year would support households expected to be affected by higher gasoline and utility bills during the peak summer season.

Japanese Interest Rates

The summary of opinions from the Bank of Japan released on Tuesday showed a clear bias toward monetary tightening and preparations for an early interest rate hike, driven by rising inflation risks linked to the Middle East crisis and the Iran war.

With oil prices continuing to rise, markets increased pricing for a quarter-point rate hike by the Bank of Japan at its June meeting from 55% to 60%.

To further reprice those expectations, investors are awaiting additional data on inflation, unemployment, and wage growth in Japan.