Japanese yen strengthened following comments made by Bank of Japan board member Seiji Adachi on Wednesday.
The Japanese yen (JPY) recovered from recent losses on Thursday, boosted by comments by Bank of Japan (BoJ) board member Seiji Adachi on Wednesday.
Adachi argued that raising interest rates may be justified if a weaker Japanese yen led to higher inflation.
Adachi highlighted a gradual reduction in bond purchases to ensure. That longterm yields appropriately reflect market signals. Additionally, he stated that hiking interest rates may be acceptable if a weaker JPY leads to greater inflation, according to Reuters.
Moreover Traders boosted bets on the Bank. The Bank of Japan (BoJ) is imposing another interest rate hike. Investors are now looking ahead to Tokyo’s inflation data. Which is expected to be released on Friday and is viewed as a crucial predictor of national price trends.
Hawkish words from Minneapolis Fed President Neel Kashkari stoked concerns about imminent rate hikes, maintaining the huge yield gap between the United States and Japan. This environment continues to encourage JPY carry trades, in which investors use the low-interest Japanese yen to invest in higher-yielding US dollar assets.
The US dollar remains stable ahead of the releases of US GDP and Core PCE.
The US Dollar (USD) rose on the back of higher US Treasury yields. Which were fueled in part by increasing risk aversion ahead of the release of US GDP Annualized (Q1) data on Thursday. Furthermore, market participants are likely to watch the Core Personal Consumption Expenditure (PCE) Price. Index statistics are slated for Friday and are expected to provide insights into the Federal Reserve’s possible stance on interest rate increases.
Daily Market Movers: Japanese Yen gains ground due to hawkish remarks by BoJ’s Adachi.
According to Bloomberg, Federal Reserve Bank of Atlanta President Raphael Bostic remarked on Thursday. That the course of inflation is expected to be uneven. And that a reduction in inflation breadth would increase confidence in the need for a rate cut.
On Wednesday, the Fed Beige Book report for the period from April to mid May revealed. That national economic activity increased somewhat. With variable conditions across industries and districts. According to the report, employment climbed little, pay growth was mild, and prices rose modestly. As consumers continued to resist Price rises.
According to Reuters, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, has hinted at the prospect of raising interest rates. Kashkari stated. “I don’t believe anyone has completely ruled out the option of increasing rates,” expressing worries about the disinflationary trend. And anticipating only two rate decreases.
On Tuesday, the US Housing Price Index (MoM) for March fell short of expectations. Coming in at 0.1% versus 1.2% in February.
Japan’s Weighted Median Inflation Index, a key indicator of the country’s trend inflation, rose by 1.1% in April. This growth rate is slower than the 1.3% increase observed in March.
Furthermore Japanese Corporate Service Price Index (CSPI). In April, the index increased by 2.8% over the previous year, surpassing Expectations were 2.3%, indicating the quickest pace of increase since March 2015.
Moreover On Tuesday, Japan’s Finance Minister Shun’ichi Suzuki stressed. The importance of currencies moving in a stable manner that reflects fundamentals, saying he is closely monitoring foreign currency (FX) fluctuations. Suzuki, however, declined to comment on whether Japan had intervened in the currency market.
