Japanese Yen oscillates between mild gains and losses against the US dollar.
The Japanese yen (JPY) pared some of its big intraday gains against the US dollar on Tuesday. After data from the US indicated that consumer prices climbed unexpectedly in November. This follows reports that Bank of Japan (BoJ) officials see no reason to eliminate negative interest rates in December. Furthermore, a continuation of the positive run in the equity markets hindered The safe-haven. JPY helped the USDJPY pair recover almost 75 pips from its daily swing low.
Traders appear cautious as a result of contradictory signals from the Bank of Japan about its near-term policy stance.
Market investors, on the other hand, appear convinced. That the Japanese central bank would eventually abandon its ultra-loose monetary policy settings early next year. Which prevents traders from making significant bearish bets on the JPY. Furthermore. Investors are staying on the sidelines, waiting for the outcome of the highly anticipated two-day FOMC monetary policy meeting later this Wednesday for some real momentum. As a result, the USDJPY pair exhibits muted range-bound price movement during the Asian session.
The Federal Reserve (Fed) is due to announce its policy decision during the US session. And interest rates are widely expected to remain unchanged. As a result. The emphasis will remain on The monetary policy announcement and updated economic estimates that go with it. This, coupled with words from Fed Chair Jerome Powell at the post-meeting press conference, will be scrutinized for clues about when the central bank may begin relaxing policy. This will influence the USD and decide the USDJPY pair’s near-term trend.
Japanese Yen bulls remain wary amid doubt over the Bank of Japan’s turn.
The US Labor Department stated on Tuesday that the headline Consumer Price Index (CPI) increased 0.1% in November, but the annual rate fell to 3.1% from 3.2% the previous month.
The annual Core CPI inflation rate, which excludes volatile food and energy prices, remained unchanged at 4.0% as predicted, rising 0.1% on a monthly basis. in comparison to the previous month.
The November figures were still significantly above the Federal Reserve’s 2% target, which, combined with Friday’s higher US jobs statistics, led investors to reduce their bets on a rate cut in March.
This allowed the US Dollar to recover from overnight losses and helped the USD/JPY pair attract some dip-buying near the 144.70 level, albeit the impetus was short-lived.
Traders have reduced their wagers on the Japanese Yen strengthening amid uncertainty about an impending shift in the Bank of Japan’s monetary stance and the current risk-on climate.
According to the Tankan survey, business confidence at major Japanese manufacturers increased more than predicted in the fourth quarter. Although this did nothing to impress JPY bulls.
The focus is still on the outcome of the FOMC’s highly anticipated monetary policy meeting.
The emphasis remains focused on the critical FOMC decision. Which will be accompanied by fresh economic predictions. And followed by a press conference by Federal Reserve Chair Jerome Powell.
Investors will be looking for new clues about. When the US central bank may begin decreasing rates in 2024, given evidence of easing inflation. And the US economy’s continued strength.
