A lot of material came out over the last week.
The US-Japan summit with no mention of a weaker yen, strong US CPI, the announcement and April 1 implementation of reciprocal tariffs, slightly higher US PPI, and the war in Ukraine with the end of the war in sight. During this period, the dollar was bought back by the US-Japan summit and rose to 154.80 yen on the CPI figure, but since the implementation of the reciprocal tariffs was set for April 1, it was effectively postponed and the dollar was sold, eventually going back and forth.

President Trump’s announcement of 25% tariffs on steel and aluminum continued to push tariffs higher, and the JGB rate rose to the 1.3% level. In this sense, the dollar is a selling point for the yen. However, if the influx of illegal immigrants stops and deportations, etc. begin, the U.S. economy may once again become more concerned about inflation as no one challenges the border.

The yen strengthened before the US-Japan summit, but when the meeting ended without incident, the dollar rose sharply from short-covering. The dollar rallied further as the U.S. CPI was strong on all fronts. However, what dominated the market was the speculation that the war in Ukraine may finally be over. U.S. President Trump and Russian President Vladimir Putin have agreed to hold talks. If the war in Ukraine is going to end, it will have to be a very Russia-friendly deal, which the Trump administration is likely to do.

The war in Ukraine may be coming to an end, but unlike the end of the war as most people imagine it, the outcome is likely to be clearly pro-Russian. Ukraine’s defeat has become decisive. What will happen to the market then? Energy prices will fall considerably, which will lead to lower inflation and lower interest rates worldwide. Stock prices will rise and U.S. long-term interest rates will fall.

This is not a bad thing for Japan. Given the decline in U.S. interest rates and strong Japanese interest rates, the dollar is likely to sell back. We would seriously consider the possibility of a Eurodollar rally.