Japanese yen’s strong momentum a variety of variables contribute.
The Japanese yen (JPY) gained some impetus as statistics released earlier this Tuesday indicated tighter labor market conditions. Furthermore, Japan’s Finance Minister Katsunobu Kato rekindled fears of potential government intervention and offered support for the JPY, dragging the USDJPY pair away from a three-month high reached on Monday. However, there are worries about the Bank of Japan’s (BoJ) ability to raise interest rates further Prevent the JPY bulls from placing aggressive wagers.
The Japanese yen supported by an unexpected drop in the country’s unemployment rate and concerns about intervention.
In fact, Yuichiro Tamaki, leader of Japan’s Democratic Party for the People (DPP), opposed further rate hikes by the Bank of Japan. Aside from that, a positive risk tone limits further appreciation for the safe-haven JPY, which, combined with the emergence of some US Dollar (USD) purchasing, helps limit the downside for the USDJPY pair. Traders also prefer to wait for the highly anticipated BoJ policy meeting and key US economic data due this week before deciding on the next leg of a directional move.
Daily Market Movers: Japanese Yen bulls appear uncommitted amid BoJ rate-hike uncertainty.
According to a study published by Japan’s Statistics Bureau on Tuesday, the jobless rate decreased from 2.5% to 2.4% in September. The job-to-applicant ratio rose to 1.24.
The report demonstrates strong labor demand and suggests that wages will rise, perhaps leading to greater inflation and allowing the Bank of Japan to raise interest rates again.
Japan’s Finance Minister Katsunobu Kato stated that he is closely monitoring foreign exchange movements, including those led by speculators, with increased vigilance, raising intervention fears.
Shigeru Ishiba, Japan’s Prime Minister, is apparently considering a coalition with the Democratic Party for the People (DPP) after failing to maintain a majority in the lower house election over the weekend.
DPP leader Yuichiro Tamaki remarked that the BoJ should avoid large policy changes now with real wages remaining at a standstill, and that policymakers should analyze Whether real wages consistently turn positive in directing fiscal and monetary policy.
The US Treasury bond yields have fallen further from a multi-month high, keeping US Dollar bulls on the defensive below the highest level since July 30, putting pressure on the USD/JPY pair.
The recent good US macro data has lowered expectations for a more aggressive easing by the Federal Reserve, and it should operate as a tailwind for US bond yields amid deficit-spending concerns following the US election.
With the US presidential election coming, the most recent poll shows a close battle for the White House between Vice President Kamala Harris and Republican nominee Donald Trump.
Traders are now looking to Tuesday’s US economic docket, which includes the Conference Board’s Consumer Confidence Index and Job Openings.
Traders are now looking to Tuesday’s US economic docket, which includes the Conference Board’s Consumer Confidence Index and Job Openings. and the Labor Turnover Survey (JOLTS), which provides short-term motivation.
The attention, however, will remain on Thursday’s BoJ decision and important US macro data, including the Advance Q3 GDP print, the Personal Consumption Expenditures (PCE) Price Index, and the Nonfarm Payrolls (NFP) report.
