Japanese yen continues on the defensive against the dollar following BoJ rate Uncertainity.
The Japanese Yen (JPY) remained on the defensive versus the US dollar at the start of a new week, hovering near its lowest level since early August during the first half of the European session. The recent comments of Japan’s Prime Minister Shigeru Ishiba, indicating that the economy was not ready for further interest rate hikes, created doubts about the Bank.
the Bank of Japan’s (BoJ) rate rise plans. This, combined with a generally upbeat tone in the equities markets, expected to reduce demand for the safe-haven JPY.
The US dollar is reaching a two-month high, with betting on the Fed’s less aggressive policies easing.
The recent bullish run of the US Dollar (USD) to a two-month high, aided by expectations for less aggressive policy easing by the Federal Reserve (Fed), appears to be another factor acting as a tailwind for the USDJPY pair. However, investors continue to expect the Fed to decrease interest rates by 25 basis points in November. In contrast, the BoJ projected to maintain its rate-hiking cycle. This necessitates prudence before putting new bullish wagers on the Japanese yen pair and preparing for future gains.
Daily Digest Market Movers: Japanese Yen remained weak amid BoJ rate hike uncertainty and favorable risk tone.
The futures market indicates a less than 50% possibility that the Bank of Japan will raise interest rates by 10 basis points before the end of the year, after Japanese Prime Minister Shigeru Ishiba’s dovish move earlier this October.
Furthermore, a dip in Japan’s real wages for the first time in three months, dropping household expenditure, and signals that price pressures from raw material costs were easing cast doubt on how aggressively the BoJ might hike interest rates.
China’s finance ministry hinted at further debt issuance amid attempts to shore up the domestic economy, saying that the central government had room for a deficit increase, although failed to provide clear specifics about the stimulus.
Investors, on the other hand, appear optimistic that comprehensive steps will be implement to stabilize important sectors of the economy.
Investors, on the other hand, appear optimistic that comprehensive steps will be implement to stabilize important sectors of the economy, and they are also encouraged by the recent rebound in US market indices, which reached record highs on Friday.
The US Bureau of Labor Statistics announced that the headline Producer Price Index (PPI) for final demand increased 1.8% and the core gauge increased 2.8% year on year in September, both modestly above market expectations.
This follows last Thursday’s higher-than-expected US consumer inflation numbers and closes the door to another big rate drop by the Federal Reserve in November, bringing the US Dollar closer to a two-month high.
However, the US central The bank projected to continue decreasing interest rates amid evidence of labor market weakness, and the BoJ predicted to raise rates again before the end of the year, limiting the upside for the USDJPY pair.
