Currency Markets React to Trade Talks as Yen Rides High

The dollar experienced a modest appreciation against the euro on Thursday, bolstered by progress in U.S. trade discussions with key partners. However, its performance against the yen was mixed. The yen's rise is attributed to expectations for possible interest rate hikes, coupled with assurances from the Japanese central bank regarding a U.S. trade agreement easing economic uncertainty.

Market analysts anticipate challenges for the yen due to Japan's upcoming upper house election, with potential political upheavals expected. Meanwhile, the European Union is poised to confirm a broad 15% tariff on its goods, aligning with analysts' predictions. Attention is now turning to the forthcoming European Central Bank policy meeting.

In economic data, France showed vulnerability amid budget cut talks, while Germany reported marginal growth. Despite current calm in hard economic statistics, experts like Mohit Kumar from Jefferies warn that the impact of trade tariffs could emerge in the coming months. Nonetheless, risk assets surged, reflecting relief from fears of a global trade war-induced economic downturn.