The Japanese yen and Swiss franc strengthened against the dollar on Monday as investors turned to safe-haven assets amid concerns over U.S. tariffs and economic slowdown risks. The yen rose 0.7% to 147.035 per dollar, nearing a five-month high of 146.94 hit last week. The Swiss franc climbed to 0.87635 per dollar, its highest level in three months.
Market anxiety stems from U.S. President Donald Trump’s delayed tariffs on key trading partners and fears of a cooling U.S. economy. Investors have reduced bullish dollar bets to $15.3 billion, down from January’s nine-year peak of $35.2 billion.
Japan’s Domestic Drivers
Japan’s yen gained support from rising wage data and Bank of Japan (BOJ) policy expectations. Regular pay in Japan jumped 3.1% in January, the largest increase since 1992, though inflation eroded real wage growth. Analysts expect the BOJ to maintain rates at its March 18-19 meeting but remain hawkish if wage growth sustains.
Eurozone Momentum
The euro edged 0.18% higher, building on its strongest weekly gain since 2009. Investors anticipate increased EU spending, particularly on defense and infrastructure, as Germany pushes fiscal reforms. Eurozone investor morale in March hit a near-two-year high, buoyed by these developments. EU finance ministers will discuss funding options for defense amid reduced U.S. military aid to Ukraine.
Inflation and Fed Outlook
Focus now shifts to U.S. inflation data due Wednesday. Markets price in 75 basis points of Fed rate cuts this year, with a June cut fully anticipated. Meanwhile, the Norwegian crown surged to 10.7144 per dollar, its strongest since October, as inflation data cast doubt on Norges Bank’s rate-cut plans.
China’s yuan slipped after February’s consumer prices fell at the fastest pace in 13 months. The British pound held steady at $1.2923 ahead of UK GDP data later this week.
