The dollar rose across the board on Wednesday, soaring against the Japanese yen to its highest since mid-1990, after U.S. inflation rose more than expected in March, pushing out the expected timing of a first rate cut to September from June. Market participants are also on the alert for any signs of intervention from the Japanese authorities to boost the yen. The big move in the yen came after data showed the Consumer Price Index (CPI) rose 0.4% on a monthly basis in March, compared with the 0.3% increase expected ...

USD: Will CPI continue to thwart Fed dovishness? US CPI data is the biggest piece of market-moving data each month. Perhaps that is no surprise given the pandemic, the Ukraine war inflation shock and, thankfully, strong signs of disinflation which emerged globally through the second half of 2023. For the Federal Reserve, sticky inflation has proved a thorn in its side. Chair Jerome Powell sounds like he would love for the Fed to cut rates and fulfil the dual mandate of 2% inflation and maximum employment. The bumpy road to ...

The dollar edged higher on Wednesday ahead of a key inflation report later in the day, while the yen remained near multi-decade lows, keeping traders on alert for signs Japanese authorities could intervene to prop up the currency. The main market focus on Wednesday is U.S. consumer price inflation for March due at 1230 GMT, which traders have been eagerly awaiting for hints on the Federal Reserve’s policy outlook. The inflation data follows a strong jobs report last Friday that blew past forecasts, raising questions on how soon and how ...

The dollar was little changed on Tuesday, trading in narrow ranges, with investors cautious ahead of U.S. inflation data, even as the yen hovered near multi-decade lows, keeping traders on alert for any possible action from Japan to prop up its currency. Economists expect the headline consumer price index (CPI) to have risen 0.3 on a monthly basis, compared with 0.4% in February, according to a Reuters poll. Core CPI is also expected to rise 0.3% for the month of March. Ahead of the CPI data due on Wednesday, the ...

USD: The case for a dollar rebound looks strong Short-term rates and the dollar have continued to diverge since Friday’s US jobs report. The 2-year USD swap rate is now trading at 4.67%, the highest since November, but the dollar is struggling to draw any real benefit. There are two factors at play here: first, risk sentiment (i.e. equity performance) has not taken the hit from the hawkish repricing in Fed rate expectations. When we think of the dollar benefitting from higher USD rates, there is often an implicit assumption ...

The dollar struggled for direction on Tuesday as investors were cautious ahead of inflation data due on Wednesday, while U.S. Treasuries rose after markets scaled back their bets on future Federal Reserve rate cuts. The yen hovered near multi-decade lows, keeping traders on alert for any signs of intervention. Traders in Fed fund futures bet on a total of about 65 basis points (bps) of rate cuts this year, up from 62 bps late on Monday, which was the lowest rate cut expectation since October last year and down from ...

The dollar slipped on Monday in thin trading as investors focused on U.S. inflation data later this week, while the yen slipped to near 34-year lows versus the greenback as traders remained alert for any potential action from Japanese authorities to support the weakening currency. The U.S. dollar fluctuated last week as traders digested a mixed bag of economic data, with a slowdown in services growth followed by unexpectedly strong hiring numbers that prompted the market to pare bets on Federal Reserve rate cuts this year. The dollar index – ...

Japanese authorities could intervene in the foreign exchange market to stem sharp falls in the yen “at any time” if its moves are excessive enough to warrant such action, a former top currency official in Japan told Reuters on Monday. Takehiko Nakao, who was vice finance minister for international affairs in 2011-2013, made his comment as the Japanese currency hovered near a 34-year low touched last month against the dollar. “The yen has weakened severely against the dollar,” Nakao said, citing the IMF’s gauge of real effective currency rates and ...

USD: Fed’s speed bump just got bigger Friday’s strong US jobs report has added to the bumpy path of US disinflation and Federal Reserve rate cuts. At the start of this year, the Fed was comfortably talking about strong disinflationary trends and the slowing labour market. Now it has seen the three-month moving average for US jobs growth rise four months in a row, lending support to those in the ‘no landing’ camp. Despite Friday’s 10bp rise in two-year US swap rates, dollar gains have proved relatively modest. Perhaps investors ...

The dollar paused on Monday as investors trained their sights on U.S. inflation data later this week, while the yen slipped close to 34-year lows as traders remained on alert for any potential action in Tokyo to support the weakening currency. The dollar fluctuated last week as traders digested a mixed bag of U.S. economic data, with a slowdown in services growth followed by unexpectedly strong hiring numbers that prompted the market to pare bets on Federal Reserve rate cuts this year. The dollar index – which tracks the greenback ...

The dollar strengthened on Friday after data showed U.S. employers hired far more workers than expected in March, potentially delaying anticipated interest rate cuts from the Federal Reserve this year. Nonfarm payrolls increased by 303,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Economists polled by Reuters had forecast 200,000 jobs, with estimates ranging from 150,000 to 250,000. The dollar index was last up 0.432% at 104.67. It has had a turbulent week, falling from a five-month high to a two-week low after ...

USD: Payroll test centred at 200k A couple of data releases this week have hinted that the strong US activity story may be about to turn. The ISM services index declined more than expected, but we were mostly interested in the “prices paid” component, which slowed meaningfully to a four-year low. Yesterday, the NFIB reported only 11% of small businesses are looking to create jobs in the next three months, the lowest percentage since May 2020. Small businesses account for roughly half of total US jobs and the hiring indicator ...

The dollar headed for its first weekly loss in a month on Friday, but pulled away from two-week lows, ahead of a key U.S. jobs report later in the day, while tensions in the Middle East kept investors on edge. Demand for safe-haven currencies, along with more warnings from Japanese authorities, helped send the yen to two-week highs against the dollar. Investors are wary of developments in the Middle East after U.S. President Joe Biden threatened on Thursday to condition support for Israel’s offensive in Gaza on it taking concrete ...

Investors raised short positions on emerging Asian currencies, with bearish bets on the Indonesian rupiah jumping sharply, as the U.S. dollar remained resilient amid uncertainty over the timeline of the Federal Reserve’s interest rate cuts, a Reuters poll showed on Thursday. Short positions on the Indonesian rupiah strengthened to their highest since Nov. 2, while those on the Thai baht jumped to their highest since October 2022, according to a fortnightly poll of 11 analysts. Recent solid U.S. manufacturing activity and labour market data have cast a shadow over the ...

Traders and investors are looking to global interest rate cuts and a closely-fought U.S. election to drag the world’s currency markets from their deepest lull in almost four years. Measures of historical and expected volatility – how much prices move over a set time period – have sunk in recent months with the world’s biggest central banks stuck in a holding pattern, depriving FX traders of the divergent moves between regional bond yields on which they thrive. Deutsche Bank’s closely-followed implied currency volatility gauge is around its lowest in two ...