Japanese yen is struggling to take advantage of its tiny intraday rise against the US dollar.
Japanese yen (JPY) is struggling to find traction versus the US dollar, swinging between tepid gains and slight losses heading into the European session on Tuesday. Market players currently believe that Japan’s political situation will make it harder for the Bank of Japan (BoJ) to tighten monetary policy further. Furthermore, the BoJ Summary of Opinions from the October meeting reveale that policymakers were split on whether to increase interest rates again.
Fears about Trump’s tariffs and rising US bond yields are undermining the lower-yielding JPY.
The concerns that US President-elect Donald Trump’s policies will raise inflation and limit the Federal Reserve’s (Fed) ability to loosen policy remain supportive of higher US Treasury bond yields. This appears to be another reason undermining the lower-yielding JPY and driving the US Dollar (USD) to its highest level since early July. However, fears that Japanese authorities could interfere in the markets to support the native currency could limit JPY losses.
Daily Market Movers: Japanese Yen bulls remain on the sidelines, failing to obtain any relief from intervention fears.
Japan’s political landscape created worries about the Bank of Japan’s ability to raise interest rates again, and conjecture further stoked by the Summary of Opinions from the The October meeting was release on Monday.
According to Kyodo News, Japanese Prime Minister Shigeru Ishiba plans his first meeting with Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation forum conference in mid-November.
Japanese Prime Minister Ishiba announced on Monday that the government plans to meet with corporate and labor union officials later this month to discuss next year’s annual pay discussions.
Tariffs planned by US President-elect Donald Trump might put a pressure on Japanese industries that export substantially to the US, potentially affecting economic growth and complicating the BoJ’s rate-hiking ambitions.
Minneapolis Fed President Neel Kashkari said on Sunday that the central bank wants to have confidence and needs more proof that inflation will return to the 2% level.
Minneapolis Fed President Neel Kashkari said on Sunday that the central bank wants to have confidence and needs more proof that inflation will return to the 2% level. target before deciding on additional interest rate decreases.
Investors now believe that Trump’s projected policy initiatives will enhance economic growth and inflation, limiting the Federal Reserve’s ability to ease monetary policy more aggressively.
The US Treasury bond yields remain stable below the post-US election swing high, and the US Dollar is near to reaching its best level since early July on Monday, providing some support for the USDJPY pair.
A slew of prominent FOMC members, including Fed Chair Jerome Powell, expected to appear this week, which, combined with US consumer inflation data, should provide clues about the US central bank’s rate-cutting strategy.
This week’s economic docket also includes the announcement of the preliminary Q3 GDP report from Japan and the United States Monthly Retail Sales numbers will be release on Friday, which could provide a boost to the USDJPY pair.
