SINGAPORE/LONDON, Sept 11 (Reuters) – The yen soared on Monday after comments by Bank of Japan Governor Kazuo Ueda raised hopes that Japan will soon emerge from a new era of negative interest rates. However, the dollar fell ahead of expectations this week. The main inflation indicator for the United States.
The U.S. dollar falls ahead of Wednesday’s release of U.S. inflation data, with traders wondering whether the world’s largest economy is actually on a “soft landing” trajectory and whether the Federal Reserve will need to raise rates further. I am paying attention to whether there is
Japan’s currency was 146.85 yen to the dollar, up 0.67% last time. The index had previously risen more than 1%, and ended September 1 after Mr. Ueda said over the weekend that the central bank could lift its negative interest rate policy once the 2% inflation target was in sight. It was 145.91, the highest since then.
Ueda said in an interview with the Yomiuri Shimbun that the Bank of Japan will have enough data to decide whether it can lift negative interest rates by the end of the year.
The yen has been under pressure against the dollar as a result of widening interest rate differentials with the United States since the US Federal Reserve began an aggressive rate hike cycle last year, but the Bank of Japan has been looking at dovish outliers. maintain.
“It seems that Mr. Ueda’s statement was intended to stop the yen’s depreciation against the dollar,” said Takehiko Masuzawa, head of trading at Phillip Securities. “His comments are working much like government intervention.”
Traders have been on the lookout for signs that Japan might intervene to shore up the yen’s value since the yen weakened to more than 145 yen to the dollar last month. A year ago, this level triggered the first yen-buying intervention by the authorities since 1998.
dollar slide
The dollar index, which measures the value of the U.S. currency against its peers, including the yen, was last down 0.1% at 104.74, after falling to its lowest in almost a week. The eighth straight week of gains ended last week.
The pound rose 0.3% to $1.2507 as the dollar weakened, moving away from last week’s three-month low. The euro rose 0.23% to $1.0725.
Last week, the U.S. dollar and U.S. Treasury yields soared as a series of solid economic data strengthened expectations that further rate hikes by the Federal Reserve were imminent.
Paul McKell, global head of currency research at HSBC, expects the dollar to reverse and remain strong this week.
“The drivers of the economic recovery have not changed, which is a solid indicator for the United States,” he said.
The Australian and New Zealand dollars were the biggest beneficiaries of the weaker dollar, rising 0.78% to $0.6428 and 0.53% to $0.5914, respectively.
Two antipodal currencies, often used as liquidity alternatives to the Chinese yuan, also benefited from the stronger yuan.
Change of tide?
China’s onshore yuan edged away from Friday’s 16-year low after the People’s Bank of China set daily midpoint guidance with the strongest bias on record on Monday, increasing displeasure with recent yuan weakness. suggested.
The previous exchange rate was 0.7% higher at 7.2935 to the dollar, and the offshore market was also up about 0.7% at 7.3155 to the dollar.
China’s consumer prices returned to positive territory in August, data showed over the weekend, as factory price declines slowed and deflationary pressures eased amid signs of economic stabilization.
“Historically, China’s inflation rate has not been negative for very long, at least not as much as a single published figure,” said Matt Simpson, senior market analyst at City Index. I was wondering if we could get a little more deflationary figures,” he said.
Separate data on Monday showed Chinese banks extended 1.36 trillion yuan ($186.18 billion) in new yuan loans in August, a sharp increase from July and more than analysts expected. Ta.
Reported by Rae Wee in Singapore and Joyce Alves in London. Additional report by Junko Fujita in Tokyo.Editing: Jason Neely and Andrew Havens
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