On Tuesday, the yen held steady near a one-week high as market reverberations from Japan’s top central banker about a potential end to its negative interest rate policy and the dollar recoup some lost territory.
In a newspaper interview over the weekend, Bank of Japan (BOJ) Governor Kazuo Ueda stated that the bank could have enough information by year’s end to decide whether it can eliminate negative rates. As a result of his comments, the yen saw its biggest day rise versus the dollar in two months on Monday.
After reaching a one-week high of 145.91 in the previous session, the Japanese yen was last trading more than 0.1% down at 146.83 per dollar.
According to Chris Weston, head of research at Pepperstone, “Governor Ueda essentially laid out a conditional path and timing for the first-rate hike and a move away from its negative interest rate policy, should the evidence warrant.
One may logically argue that the BOJ would like to be able to raise rates and abolish YCC at the same time. It is reasonable to conclude that the BOJ is also one step closer to doing away with yield curve control (YCC).
Since the Federal Reserve started its aggressive rate-hike cycle last year while the BOJ remains a dovish outlier, the yen has come under intense pressure against the dollar as a result of widening interest rate differentials with the US.
Hiroshige Seko, a senior member of Japan’s ruling party, expressed a different interpretation of Ueda’s comments, claiming that they indicated that the central bank will continue its programme of monetary easing.
The New Zealand dollar dropped 0.16% to $0.5910 while the Australian dollar recently traded slightly lower at $0.6430 as the U.S. dollar somewhat reversed some of its losses from the previous session.
On Monday, both Australian and New Zealandan currencies rose 0.8% and 0.6%, respectively, against a weaker US dollar, placing them among the top gainers.
The euro, which earlier in the day reached a one-week high of $1.0771, recently fell by 0.08% to trade at $1.0738.
Given that there has been “pretty strong momentum behind long U.S. dollar positions broadly across G10 currency pairs,” said IG market analyst Tony Sycamore, “I think it’s given the market reason to take profit ahead of the (inflation) numbers in the U.S.”
On Wednesday, the U.S. government will release its August inflation figures, which will help traders determine if the world’s largest economy is actually on track for a “soft landing” and how far the Federal Reserve can raise interest rates.
The U.S. dollar index, which had an eight-week winning streak at the conclusion of last week, increased 0.07% to 104.64 after declining 0.46% the day before. At $1.2514, the pound remained stable.
Near their one-week highs, the onshore and offshore yuan both found some support and were last bought at 7.2907 and 7.3072 per dollar, respectively.
On Monday, the two had their biggest day rise versus the dollar in roughly six months.
On Wednesday, the U.S. government will release its August inflation figures, which will help traders determine if the world’s largest economy is actually on track for a “soft landing” and how far the Federal Reserve can raise interest rates.
The U.S. dollar index, which had an eight-week winning streak at the conclusion of last week, increased 0.07% to 104.64 after declining 0.46% the day before. At $1.2514, the pound remained stable.
Near their one-week highs, the onshore and offshore yuan both found some support and were last bought at 7.2907 and 7.3072 per dollar, respectively.
On Monday, the two had their biggest day rise versus the dollar in roughly six months.