Japanese yen strengthens as traders expect the Bank of Japan to boost interest rates next week.
The Japanese Yen (JPY) extended its advances for the second consecutive session on Tuesday, possibly due to rising risk aversion. Traders are anticipating the Bank of Japan’s (BoJ) interest rate announcement next week, which could include an interest rate hike to boost the JPY.
Toshimitsu Motegi, a top ruling party leader, encouraged the Bank of Japan to publicize its plans to normalize monetary policy.
Toshimitsu Motegi, a top official in the ruling party, has asked According to Reuters, the Bank of Japan (BoJ) will communicate more explicitly about its goal to normalize monetary policy through gradual interest rate hikes, emphasizing that excessive Yen drops were harming the economy. Prime Minister Fumio Kishida also stated that adjusting the central bank’s monetary policy would help Japan’s shift to a growth-driven economy.
The USDJPY pair is under pressure as the US Dollar (USD) falls due to rising bets on a Federal Reserve (Fed) rate decrease in September. Fed Chair Jerome Powell stated that he is getting more optimistic about inflation in recent months. Meanwhile, Fed Governor Christopher Waller remarked that the moment to cut policy rates is approaching.
Daily Digest Market Movers: Japanese Yen gains ground thanks to greater, Vice President Kamala Harris has secured the Democratic presidential nomination after passing 1,976 delegates.
Harris is now the Democratic Party’s presumptive nominee for the November presidential election.
President of the Federal Reserve Bank of New York, John Williams, remarked on Friday that the long-term trends that led to drops in neutral interest rates prior to the epidemic remain. remarked, “My own Holston-Laubach-Williams estimates for r-star in the United States, Canada, and the Euro area are about the same level as they were before the pandemic,” according to Bloomberg data.
Japan’s National Consumer Price Index (CPI) maintained steady at 2.8% in June, maintaining the previous month’s figure and remaining at its highest level since February. Meanwhile, core CPI inflation increased to 2.6%.2.5% is little higher than the previous measurement, although it is still slightly lower than the consensus prediction of 2.7%.
JP Morgan anticipates no rate hikes from the Bank of Japan (BoJ) in July or any time in 2024. A July rate hike is not their base case, and they do not anticipate any increases for the rest of 2024. They believe it is too early to take a bullish attitude on the yen.
Kazushige Kamiyama, a senior Bank of Japan (BoJ) official and the central bank’s Osaka branch manager, stated on Thursday that the BoJ intends to keep the monetary environment as liberal as possible, according to Jiji News Agency.
Fed Chair Jerome Powell against reducing US interest rates before to the presidential election in November.
During an interview with Bloomberg News on Tuesday, President Trump warned Fed Chair Jerome Powell against reducing US interest rates before to the presidential election in November. However, if re-elected, Trump has stated that he will let Powell to finish his term provided he continues to “do the right thing” at the Federal Reserve.
Last week, BoJ statistics revealed that authorities may have interfered by acquiring approximately ¥6 trillion on July 11 and 12. Furthermore, data revealed that Japan sold around $22 billion in US Treasuries in May to raise dollars, boosting its reserves for prospective foreign exchange market operations, reports Reuters.
