By Rae Wee

SINGAPORE (Reuters) – Australian and New Zealand dollars rose on Friday as did the yuan, reacting to comments from U.S. President Donald Trump suggesting a softer stance on tariffs against China, while the Yen is on guard ahead of a Bank of Japan (BOJ) rate decision.

Trump said in an interview with Fox News that aired Thursday night that he doesn’t need to use tariffs on China, adding that he thinks he can reach a trade deal with the world’s second-largest economy.

The Australian dollar jumped 0.4% to a five-week high of $0.6310 shortly after the comments, while the New Zealand dollar similarly gained 0.42% to its highest since mid-December at $0.5700 .

The two Antipodean currencies are often used as liquid proxies for .

China’s yuan similarly got a boost on the back of Trump’s comments, with the onshore unit rising nearly 0.3% to 7.2682 per dollar.

Its offshore counterpart was last 0.23% higher at 7.2699 per dollar.

Elsewhere, the yen was little changed at 156.18 per dollar, suffering near a one-week low hit in the previous session.

The BOJ concluded its two-day policy meeting later in the day and markets fully priced in a 25-basis-point hike, with comments from BOJ officials in recent times that also introduced such a step.

The Japanese currency surged last week on high expectations for a rate hike but has since given up some of the gains as traders also await further clarification on the BOJ’s policy outlook.

“The BOJ is likely to continue with a rate hike,” said Vincent Chung, co-portfolio manager for diversified income bond strategy at T. Rowe Price.

“We expect this initial rate increase in 2025 to be followed by a series of gradual increases, which could bring the policy rate to 1% by the end of the year. end of the BOJ’s neutral rate .”

Analysts said a hawkish hike from the BOJ would be needed to prevent the yen from falling again after Friday’s decision, with officials likely to signal further rate hikes ahead.

Underscoring expectations for rising borrowing costs on Friday, data showed Japan’s core consumer prices rose 3.0% in December from a year earlier to mark the fastest annual pace yet. in 16 months.

DOLLAR BLIP

In the broader market, the dollar headed for its worst weekly fall in two months, after Trump’s widely expected tariff announcements failed to materialize after his inauguration, unlike what he had threatened during his campaign.

The greenback is set to lose 1.4% against a basket of currencies, the steepest decline since November. It was last 0.23% lower at 107.89 on Friday.

The euro, meanwhile, rose 0.26% to $1.0443 and headed for a 1.7% weekly gain. Sterling edged 0.21% higher at $1.2377 and was similarly poised for a rise of 1.5% for the week, snapping a three-week losing streak.

Also adding to the headwinds for the dollar are comments from Trump demanding that the Federal Reserve cut interest rates, arguing that he understands monetary policy better than those charged with setting it.

“Trump’s comments … are a reminder that we have this constant source of volatility that comes from off-the-cuff comments, and of course, this on paper challenges a little bit of that independence of Fed,” said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:).

Trump’s comments come just days before the Fed’s first policy meeting to be held during his administration, with high expectations that officials will leave rates unchanged.

Among cryptocurrencies, bitcoin was last 0.26% higher at $103,359.72, while ether gained 1.88% to $3,309.79.

Trump on Thursday ordered the creation of a cryptocurrency working group tasked with proposing new digital asset regulations and exploring the creation of a national cryptocurrency stockpile, making good on his promise to quickly change the US crypto policy.