Japanese yen increases as the US dollar falls ahead of the US election results on Tuesday.
The Japanese yen (JPY) strengthened on Monday while the US dollar (USD) fell, likely due to growing uncertainty around Tuesday’s US presidential election. However, JPY liquidity is limited due to the closure of Japanese markets for Sports Day, which prohibits physical trading of US Treasuries.
JPY liquidity expected to be constrained because Japan’s markets will be closed on Monday for Sports Day.
The Japanese yen may decrease in the future, as political and monetary Policy uncertainties have increased following the Liberal Democratic Party (LDP) coalition’s legislative majority win last week, which has caused confusion over the Bank of Japan’s (BOJ) policy orientation.
However, at the post-meeting briefing last Thursday, BoJ Governor Kazuo Ueda noted that economic risks in the United States appear to be declining, implying that a rate hike is possible. Meanwhile, the Bank of Japan maintained its policy rate at 0.25%, as predicted.
US dollar fell due to the revelation of weaker Nonfarm Payrolls ahead of the Fed’s decision later this week.
The weaker-than-expected Nonfarm Payrolls (NFP) statistics for October may have contributed to the US dollar’s drop ahead of the Federal Reserve’s (Fed) interest rate decision later this week. The CME FedWatch Tool predicts a 99.6% chance that the Fed will Policy uncertainties have increased following the Liberal Democratic Party (LDP) coalition’s legislative majority win last week, which has caused confusion over the Bank of Japan’s (BOJ) policy orientation.
However, at the post-meeting briefing last Thursday, BoJ Governor Kazuo Ueda noted that economic risks in the United States appear to be declining, implying that a rate hike is possible. Meanwhile, the Bank of Japan maintained its policy rate at 0.25%, as predicted.
The weaker-than-expected Nonfarm Payrolls (NFP) statistics for October may have contributed to the US dollar’s drop ahead of the Federal Reserve’s (Fed) interest rate decision later this week. The CME FedWatch Tool predicts a 99.6% chance that the Fed will will decrease interest rates by a quarter-point in November.
Daily Market Movers: Japanese Yen increases as US Dollar falls ahead of the US election.
The most recent poll shows Vice President Kamala Harris with tiny advantages in Nevada, North Carolina, and Wisconsin, while former President Donald Trump has a slim lead in Arizona. Candidates are in close races in Michigan, Georgia, and Pennsylvania. The last New York Times/Siena College survey, conducted between October 24 and November 2, found that all matchups in seven key states had a 3.5% margin of error.
US nonfarm payrolls increased by 12,000 in October, following a revised September rise of 223,000 (down from 254,000), well below market estimates of 113,000. Meanwhile, the unemployment rate held unchanged at 4.1% in October, which matched the consensus expectation.
Yoshimasa Hayashi, Japan’s Chief Cabinet Secretary, remarked on Friday that he expects the Bank of Japan to work closely with the government to implement appropriate monetary policy aimed at meeting its price objective in a sustainable and stable way.
The headline au Jibun Bank Japan Manufacturing PMI stood at 49.2 in October, down from 49.7 in September. This composite single-figure indicator reveals that Japanese industrial production continued to deteriorate at the start of the fourth quarter of 2024, with both output and new order inflows falling at a faster rate.
US Personal Consumption Expenditures (PCE) Price Index revealed that core inflation rose 2.7% year on year in September.
The US Personal Consumption Expenditures (PCE) Price Index revealed that core inflation rose 2.7% year on year in September. Additionally, initial jobless claims fell to a five-month The low of 216,000 for the week ending October 25 indicates a strong labor market and lowers prospects for immediate Fed rate reduction.
Following Thursday’s two-day monetary policy review, the Bank of Japan opted to maintain its short-term interest rate target of 0.25%. This action was consistent with market expectations for maintaining stability.
According to the BoJ Outlook Report for Q3, the central bank intends to continue hiking policy rates as long as the economy and prices meet its expectations, especially given the current low real interest rates. The Bank of Japan’s monetary policy attempts to achieve its 2% inflation target in a sustainable and consistent manner.
US Gross Domestic Product GDP increased by 2.8% on an annualized basis in Q3, falling short of the 3.0% expected for Q2. According to the ADP Employment Change report, 233,000 new jobs were created in October, the highest rise since July 2023. This followed an upward revision of 159,000 in September and much above predictions of 115,000.
