This week, the news of the U.S. refunding programme is also a major emphasis (new remark, byline, NEW YORK dateline, bullets, FX table; price changes) Written by Gertrude Chavez-Dreyfuss and Alun John October 30, London/New York (Reuters) – Monday saw a two-week low for the US dollar vs the yen as traders braced themselves for a busy week filled with important central bank meetings and significant economic data releases. Monday marked the start of the Bank of Japan’s (BOJ) two-day monetary policy meeting, which will take place this week together with interest rate decisions from the Bank of England (BoE) and the U.S. Federal Reserve.
This week also brings a plethora of other releases, including purchasing managers’ surveys, GDP and inflation figures for the euro zone, and the U.S. nonfarm payrolls. Helen Given, an FX trader at Monex USA in Washington, stated, “The U.S. dollar is sliding this morning, but not in a measure that puts it trading outside recent ranges.” “If consumer data domestically hadn’t been so strong last week, we’d probably be looking at a bigger slide for the dollar, but markets are still finding it quite difficult to discount the resilience of the U.S. economy.” Analysts also mentioned the potential impact on the bond and currency markets of the U.S. Treasury’s quarterly refunding statement on Wednesday.
The news of the return comes at a time when the U.S. Treasury’s financial needs have significantly expanded due to growing deficits and a higher burden of interest rates. The latest refunding notification was made in August, and since then, borrowing rates have skyrocketed to levels not seen since 2006–07. A greater deal than normal for investors will be the Treasury’s announcement of borrowing projections for the fourth quarter and the first three months of 2024. The bond market was rattled on July 31st when it was revealed that $1.007 trillion was needed for funding in the third quarter. This disclosure resulted in a substantial surge in auction volumes. A little increase in the euro affected the dollar index, which was down 0.30% at 106.60 after hitting a one-week low of 106.22 earlier.
At $1.0605, the euro was up 0.4% as of late. Cooling German state inflation data, suggesting slower headline inflation in the largest economy in the euro zone, and a different release revealing a 0.1% quarter-over-quarter decline in the German gross domestic product in the third quarter—albeit above expectations—were among the events that occurred in Europe on Monday. FIRST BANKS Investors are paying close attention to the BOJ meeting out of the three central bank meetings because of increased rumours regarding a potential policy change. The BOJ is under further pressure to alter its bond yield control policy in light of the recent spike in global interest rates. There is growing speculation that the central bank may raise its current yield cap during this week’s meeting.
Barring any surprises, the Fed and BoE are both anticipated to maintain stable interest rates, so the message that the officials convey will be the main emphasis. The yen was little moved in relation to the dollar, which had previously dropped to a two-week low of 149.28 yen and was now trading at 149.72. The Japanese yen had a little recovery after plunging to a one-year low of 150.78 per US dollar last week. At $1.2141, the pound was up 0.2%. Forecasts of the Fed’s rate-hike trajectory will also be influenced by the nonfarm payrolls data from the United States on Friday. For October, Wall Street analysts predict that 188,000 new jobs will be created in the United States.