Japanese yen is trading close below its two-week high against the US dollar on Thursday.
The Japanese yen (JPY) is expected to oscillate in a narrow range against the US dollar heading into the European session on Friday, consolidating recent advances to more than a two-week high reached the day before. The new optimism prompted by the Gaza ceasefire discussion continues. supports a generally upbeat tone in the equity markets and undermines the safe-haven JPY.
The BoJ’s hawkish leaning, combined with China’s economic troubles, appears to support the safe-haven Japanese yen.
The downside, however, is cushioned by the Bank of Japan’s (BoJ) hawkish stance last week. And concerns about a recession in China, the world’s second-largest economy.
The USD bulls are on the defensive as they expect the Fed’s monetary stance to turn soon.
The US Dollar (USD), on the other hand, remains down near its weekly low amid expectations. That the Federal Reserve (Fed) may begin decreasing interest rates later this year. This, in turn, prevents the USDJPY pair from capitalizing on the overnight small recovery from sub 146.00 levels. However, a goodish rise in US Treasury bond yields provides some support for the USD.
Investors choose to remain on the sidelines and await the US jobs data (NFP) for a fresh impetus.
Traders also appear reluctant to place strong directional bets. Preferring to wait for the The Nonfarm Payrolls (NFP) report. Which is widely known in the United States, is released monthly.
Daily Market Movers: Japanese Yen gains support from BoJ’s hawkish tilt, while favorable risk tone limits gains.
The Japanese yen is supported by the Bank of Japan’s announcement this week. That it is committed to attaining its inflation target, paving the way for interest rates to be lifted out of negative territory at its forthcoming meetings in March or April.
Tensions in the Middle East remain high after the US threatened to take “all necessary actions. To safeguard its soldiers following a deadly drone assault in Jordan. While Yemen based Houthi militants continue to attack ships in the Red Sea.
Reuters, quoting a Palestinian official, reported. That Hamas received its first bid for extended a break in the fighting in Gaza in exchange for the release of the other hostages, but has yet to react.
According to an official factory survey released on Wednesday. Manufacturing activity in China fell for the fourth consecutive month in January. Indicating that the world’s second-largest economy is struggling to regain momentum.
The US Dollar has experienced a stunning turnaround from its year-to-date top reached on Thursday. With widespread consensus that the Federal Reserve would decrease interest rates this year.
Fed Chair Jerome Powell said on Wednesday that interest rates had peaked. And will fall in the coming months, but he pushed back against market expectations for a move in March.
The yield of the benchmark 10-year US government bond bounces off a one-month low reached on Thursday. But remains below 4%, keeping US Dollar bulls on the defensive.
Investors are now looking forward to the release of the US monthly employment report.
Investors are now looking forward to the release of the US monthly employment report (NFP). Which is likely to reveal that the economy added 180K jobs in January compared to 216K the previous month.
Meanwhile, the unemployment rate is expected to move higher to 3.8% from 3.7% in December. While average hourly earnings growth is expected to keep stable at the 4.1% YoY pace during the reporting month.
