FX markets are waiting for CPI data
2023.01.12 03:47
FX markets are waiting for CPI data
By Tiffany Smith
Budrigannews.com – The Japanese yen surged ahead of the Bank of Japan meeting next week, while the U.S. dollar stabilized in early European trade on Thursday ahead of a widely anticipated U.S. consumer inflation release.
The, which compares the dollar to a basket of six other currencies, edged up to 102.918 at 03:00 ET (8:00 GMT), not far from its seven-month low of 102.76 earlier in the session.
Since the end of last year, the dollar’s rally that brought it to a 20-year high in September was ended by the easing of interest rate increases by the and the expectation of additional easing to come.
The expectation that the Fed will moderate its aggressive rate hikes has been fueled by data showing inflation falling back from 40-year highs. As a result, the December release, which is scheduled for later in the session, is now the primary focus.
The headline annual rate is anticipated to fall from 7.1% in December to 6.5 percent, indicating that inflation eased further from the previous month. The figure, which does not include volatile food and energy prices, is expected to grow by 5.7% annually, down from 6.0% in November.
According to analysts at ING, “This year’s FX market proposition remains whether U.S. inflation can acquiesce enough to allow the Fed to cut later this year.” The markets anticipate a 50- to 60-bp increase in the spring and a similar reduction by the end of the year.”
According to a local report, the Bank of Japan may review its bond yield targeting policy at the policy meeting next week, potentially taking additional measures to correct yield curve distortions. As a result, it fell 0.6% to 131.69 elsewhere.
Despite other senior central banks, particularly the Federal Reserve, beginning to aggressively tighten interest rates to combat soaring inflation, the yen suffered severely last year as the resolutely maintained a soft monetary policy stance.
However, since the Japanese central bank made a surprise change to its bond yield control in December, there has been growing speculation that it will have to do something similar again given the country’s severe inflationary pressures.
increased by 0.1 percent to 1.0761 after reaching a seven-month high of 1.0776 in the previous session, increased by 0.1 percent to 1.2149, and edged up to 0.6901.
after data showed that economic activity was beginning to pick up after the government relaxed most anti-COVID measures, the yuan fell 0.2% to 6.7590, close to a five-month high. The data showed that economic activity increased slightly more than expected in December compared to the previous month.
More Dollar continues to fall on Asia FX
