Japan’s yen is at three-decade lows and under enough pressure to prompt strong official warnings of intervention to prop it up. The yen has fallen despite Japan’s first interest rate hike since 2007 and optimism about the economy. It traded at 153.24 per dollar on April 10, its weakest since 1990 and in real terms it is at its weakest since at least the 1970s. A weaker yen is a boon for Japanese exporters’ profits, and for tourists visiting Japan who find their currencies going further, but it squeezes households ...

The yen’s fresh slide to a 34-year low complicates the Bank of Japan’s deliberations on the timing of a next interest rate hike, as a resulting rise in import costs pushes up inflation but also hurts already weak consumption and the broader economy. If that weakness persists and discourages small firms from hiking pay, the central bank may prefer to wait at least until autumn before hiking, say five government officials and sources familiar with its thinking. The BOJ is seen raising this year’s price forecast at the next meeting ...

USD: CPI delivers stronger dollar and tighter financial conditions Yesterday’s release of the March US CPI data continued the run of strong/above consensus US inflation and activity data. Last week, we were talking about the dollar being at the crossroads given that the market was pricing 75bp of 2024 easing – the same as the Fed median Dot Plot. Well, those high CPI figures have now seen the market take a decisive turn in favour of the stronger-for-longer camp. And Fed easing expectations have been pared back to just 42bp ...

The dollar was firm on Thursday after hotter-than-expected U.S. inflation data squashed lingering expectations of the Fed starting its rate-cutting cycle in June, while the yen languished at the levels last seen in the middle of 1990. Investor focus will now be on U.S. producer price data and the European Central Bank’s policy meeting later in the day. The yen’s slide to a 34-year low of 153.24 per U.S. dollar on Wednesday brought intervention fears back as authorities in Tokyo reiterated that they would not rule out any steps to ...

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 ...