Japanese yen falls, most likely due to thin trading circumstances caused by Monday’s holiday.
In holiday-thinned trade on Monday, the Japanese yen (JPY) extended its losses for the third straight session. This negative movement may be influenced by growing concerns that the Bank of Japan (BoJ) is not eager to boost interest rates.
BoJ Governor Ueda remarked that the central bank will continue to modify the pace of monetary easing as appropriate.
The Bank of Japan maintained its interest rate target of 0.15-0.25% at its meeting on Friday. Governor of the Bank of Japan, Kazuo Ueda, stated that the central bank “will continue to modify the pace of monetary easing as necessary to meet our economic and inflation aims.” Ueda recognized that, while Japan’s economy is gradually recovering, there are still indicators of underlying fragility.
The US dollar gains support as Treasury yields rise.
The US dollar (USD) continues to strengthen as Treasury yields recover from their losses. However, the Greenback may face hurdles as the US Federal Reserve (Fed) is expected to decrease interest rates further in 2024. According to the CME FedWatch Tool, markets anticipate a 50% chance of a 50 basis point rate drop to 4.0-4.25% before the end of the year.
Daily Market Movers:Japanese yen has depreciated due to concerns over the Bank of Japan’s delay in raising interest rates.
In a recent interview, Japan’s new “top currency diplomat,” Atsushi Mimura, indicated that the Japanese yen has depreciated due to concerns over the Bank of Japan’s delay in raising interest rates. According to NHK, the previous Yen carry transactions have most certainly been unwound. Mimura warned that if such trades resume, it might lead to more market instability. “We are always monitoring the markets to ensure that does not happen,” she said.
On Friday, Philadelphia Fed President Patrick Harker noted that the US central bank has successfully navigated a tough economic landscape in recent years. Harker compared monetary policy to driving a bus, which requires a delicate balance of speed.
Shunichi Suzuki, Japan’s finance minister, said on Friday that he “will continue to monitor and analyze the impact of the latest US rate cut on the Japanese economy and financial markets.” Suzuki further stated that the Federal Reserve Bank’s (FRB) perspective Regarding the US economy coincides with the Japanese government’s assessment that the US economy will expand.
Japan’s Consumer Price Index (CPI) rose to 3.0% year on year in August, up from 2.8% earlier.
Japan’s Consumer Price Index (CPI) rose to 3.0% year on year in August, up from 2.8% earlier, marking the highest level since October 2023. Furthermore, the Core National CPI, excluding fresh food, reached a six-month high of 2.8%, rising for the fourth consecutive month and meeting market forecasts.
The Federal Open Market Committee (FOMC) reduced the federal funds rate to a range of 4.75% to 5.0%, the Fed’s first rate drop in more than four years. Fed members upgraded their quarterly economic predictions, raising the median expectation for unemployment to 4.4% by the end of 2024, up from 4.0% in June. They also raised Their long-term projection for the federal funds rate ranges from 2.8% to 2.9%.
Federal Reserve Chair Jerome Powell responded to the aggressive 50 basis point rate cut, saying, “This decision reflects our increased confidence that, with the right adjustments to our policy approach, we can maintain a strong labor market, achieve moderate economic growth, and bring inflation down to a sustainable 2% level.”
In August, Japan’s Merchandise Trade Balance Total showed a trade deficit of ¥695.30 billion, up from ¥628.70 billion the previous month, but below market expectations of a ¥1,380.0 billion deficit. Exports rose 5.6% year on year, marking the ninth consecutive month of growth, but fell short of the expected 10.0%. Imports increased by only 2.3%, the slowest rate in five months, considerably underperforming the predicted 13.4% increase.
