USDJPY rose to a two-and-a-half-month high against the US dollar.
USDJPY recovers from a daily low. As the Bank of Japan’s Adachi refuted rumors. About the end of negative interest rates.
The Japanese Yen (JPY) gave up some of its big intraday gains versus the US Dollar (USD). After Bank of Japan (BoJ) board member Seiji Adachi dismissed media reports. That the central bank is searching for alternatives to stop its negative interest rate policy. Aside from that, a bullish risk tone. Which tends to undercut the safe-haven JPY, helps the USDJPY pair recover more than 50 pips from the lows. The Asian session trough is about 146.65, or the lowest level since September 12.
Dovish Fed views continue to push down US bond yields and weigh on the greenback.
However, any further recovery for the USDJPY pair appears elusive. In light of growing recognition that the Federal Reserve (Fed) was likely done hiking interest rates. Furthermore, Fed Governor Christopher Waller’s overnight dovish statements increased rate-cut bets. Leading to a further decrease in US Treasury bond yields. This undermines the USD and calls for prudence before concluding. That spot prices have found a near-term bottom.
Nonetheless, the USDJPY pair has fallen for the fourth consecutive day. As traders await the announcement of the preliminary or second estimate of US GDP growth in the third quarter. The world’s largest economy is expected to have expanded at a 5% annualized rate. up from 4.9% previously forecast. The market’s focus will next shift to Thursday’s release of the US Core PCE Price Index. The Fed’s favored inflation gauge.
Daily Digest Market Movers: The Japanese Yen pares some of its intraday gains following remarks by Bank of Japan board member Seiji Adachi.
According to Adachi of the Bank of Japan, Japan has yet to witness a sufficiently embedded positive wage-inflation cycle. And it is acceptable to patiently continue the current easy policy.
Adachi noted that the BoJ will adopt additional easing measures if necessary. Adding that the October move to make YCC flexible was not intended. To set the framework for policy normalisation.
The statements weaken the Japanese yen and allow the USDJPY pair is to recover from a multi-month low. But additional gains are limited by dovish Federal Reserve views.
Fed Governor Michelle Bowman said on Tuesday. That she is still inclined to support raising interest rates. If new data show that inflationary growth has paused.
Longer-term inflation expectations have been encouragingly consistent, according to New York Fed President John Williams, but he made no monetary policy comments.
Fed Governor Christopher Waller stated that there are compelling economic justifications for lowering the policy rate if inflation continues to fall for several months.
Waller also expressed his growing confidence. That policy is currently well positioned to slow the economy. And return inflation to the central bank’s 2% target.
The The Fed’s dovish words support the market’s belief. That the Fed is finished tightening policy. And may begin reducing interest rates in the middle of 2024.
US Consumer Confidence Index increased to 102 in November.
In terms of economic data, the Conference Board’s US Consumer Confidence Index increased to 102 in November from a downwardly revised 99.1 the previous month.
Consumers’ 12-month inflation forecasts declined to 5.7% in November, down from 5.9% in October. According to a University of Michigan study released last week. Which found that long-term inflation predictions surged in November to levels last seen in 2011.
Traders are now looking for short-term momentum in the form of the preliminary US GDP data. Which is likely to reveal. That the economy expanded at a 5% annualized rate during the third quarter.
