Japanese yen to lose value against US dollar.
The Japanese yen (JPY) partially reverses Friday’s strong move up to the highest level since October 21 as it drifts lower against its US ounterpart at the beginning of a crucial week. In response to US President-elect Donald Trump’s threatened 100% tariffs on BRICS countries, US Treasury bond yields have started to rise again. Consequently, this helps to revitalize demand for the US dollar (USD) and turns turned out to be a major driver of flows away from the JPY, which has a lower yield.
JPY driven by rising US bond yields and a more optimistic outlook on risk.
In addition, demand for the safe-haven JPY is further weakened by the general bullish sentiment surrounding the equity markets. Deeper JPY losses should be restrained, however, by ongoing geopolitical tensions and growing expectations of another interest rate cut by the Bank of Japan (BoJ) in December. Additionally, traders may decide to hold off on making aggressive directional bets in favor of waiting for this week’s key US macro releases, which begin with the ISM Manufacturing PMI later on Monday.
Daily market Update: Japanese yen draws new sellers; bets on a BoJ rate hike could limit losses as rising US bond yields boost demand for the USD.
The ‘BRICS’ countries—Brazil, Russia, India, China, and South Africa threatened with a 100% tariff by US President-elect Donald Trump – if they use a different currency for international transactions instead of the US dollar.
This exacerbates market concerns about the second wave of a global trade war and follows Trump’s promise to impose significant tariffs on America’s top three trading partners: China, Canada, and Mexico.
Investors now appear to be persuad that Trump’s expansionary policies and tariff plans could raise consumer prices and pave the way for the Fed to either raise interest rates or cease lowering them altogether.
In addition to helping the USD recover from a nearly three-week low, the likelihood of a less dovish Fed causes a new spike in US bond yields, which expected to divert flows away from the lower-yielding Japanese yen.
The improved consumer inflation data released on Friday by Tokyo, the capital of Japan, supported the argument for the Bank of Japan to raise interest rates again in December by indicating that the underlying inflation is picking up steam.
Although he would like to see what kind of momentum the fiscal 2025 Shunto creates, BoJ Governor Kazuo Ueda stated on Saturday that the next interest rate hikes are approaching because economic data is on track.
Strong domestic demand was supporting the fragile economic recovery, according to Japan’s Ministry of Finance’s report released Monday, which showed that capital spending increased 8.1% year over year in the third quarter.
Syrian rebels led by the jihadi organization Hayat Tahrir al-Sham, who unexpectedly seized control of the majority of Aleppo.
Syrian rebels led by the jihadi organization Hayat Tahrir al-Sham, who unexpectedly seized control of the majority of Aleppo, have been the target of numerous airstrikes by Russian and Syrian aircraft offensive on Saturday, as well as making their way into Hama.
In order to reach a ceasefire agreement and bring about peace, Ukrainian President Volodymyr Zelenskyy has said that he is willing to cede occupied Ukrainian territory to Russia, albeit with certain restrictions.
The NBS Non-Manufacturing PMI decreased to 50.0 during the reported month from 50.2 in October, while China’s official Manufacturing Purchasing Managers’ Index (PMI) increased marginally to 50.3 in November from 50.2.
In anticipation of further stimulus from the government to boost domestic demand, China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) surged to 51.5 in November from 50.3 in October.
The key US macro releases this week, such as the eagerly anticipated US monthly employment details (NFP) report, now regarded by investors as indicators regarding future rate-cut trajectory of the Fed and some significant catalysts.
