BLOWING HOT & COLD ON THE TRADE FRONT

U.S. and Japanese officials were busy making nice a day after Washington threatened to impose trade sanctions against Tokyo in 60 days. Today, officials from both countries expressed confidence that an agreement to lower the trade imbalance between the two countries would be reached soon. Their optimism notwithstanding, the dollar fell yet again against the yen to close at 99.40 -- below the psychologically important level of 100 yen. The reason? Ross Taylor, senior vice president of the Japanese bank Daiwa America, told TIME Daily: government figures this week will show that the trade gap widened in June. Moreover, Taylor says, the U.S. is expected to react to this bad news by devaluing its own currency, making American goods cheaper, and more attractive, to the Japanese.