USDJPY soon rises above 146.50 as investors reassess their support for a Fed rate cut in March.
In the European session, the USDJPY pair reached a new monthly high of 146.60. The major has seen strong buying activity as investors reassess their bets on the Federal Reserve (Fed) cutting interest rates in March.
The December economic figures from the United States show that the last leg of consumer price inflation is still persistent, labor demand is steady, but company owners are cutting down. Factory-gate prices for goods and services. This suggests that concerns about the persistence of inflation remain considerable.
Fed Bostic predicts a slowing in the decline of inflation to 2%.
According to the CME Fedwatch tool, traders believe the Fed will cut interest rates by 25 basis points (bps) in March, down from 70% on Monday. Atlanta Fed President Raphael Bostic’s comments pushed back market expectations for early rate cuts, as he cautioned of a slow return of inflation to the 2% target.
S&P500 futures have suffered large losses in the European session, signaling a severe decrease in market players’ risk appetite. In a cautious market attitude, the US Dollar Index (DXY) has recorded a new weekly high above 103.00. The 10-year US Treasury rate has risen above 4.0%.
Positive PPI statistics from Japan failed to provide support for the Japanese Yen.
On the Tokyo front, positive December Producer Price Index (PPI) data failed to strengthen the Japanese Yen. The monthly increase in the PPI was consistent at 0.3%, while investors expected a flat performance. The yearly PPI figures stayed flat in November, following a 0.3% increase in November. Investors predicted a 0.3% decline in annual pricing of products and services at factory gates.
