- USD/JPY climbs quickly above 146.50 as investors reconsider bets supporting a rate cut from the Fed in March.
- Fed Bostic sees a slowdown in progress in inflation declining towards 2%.
- Upbeat Japan’s PPI data failed to offer cushion to the Japanese Yen.
The USD/JPY pair has printed a fresh monthly high at 146.60 in the European session. The major has witnessed a significant buying interest as investors are reconsidering bets supporting for a rate cut decision by the Federal Reserve (Fed) in March.
The United States economic data, released for December, has indicated that the last leg of consumer price inflation is still stubborn, labor demand is steady, however, business owners are reducing prices of goods and services at factory gates. This indicates that fears of inflation remaining persistent are still high.
As per the CME Fedwatch tool, traders see a 66% chance for the Fed reducing interest rates by 25 basis points (bps) in March against 70% from Monday’s trading session. The commentary from Atlanta Fed President Raphael Bostic pushed back market expectations of early rate cuts as he warned about languishing return of inflation towards the 2% target.
S&P500 futures have posted significant losses in the European session, indicating a sharp decline in the risk-appetite of the market participants. The US Dollar Index (DXY) has printed a fresh weekly high above 103.00 as amid cautious market mood. 10-year US Treasury yields have climbed above 4.0%.
On the Tokyo front, upbeat Producer Price Index (PPI) data for December failed to uplift the Japanese Yen. Monthly growth in the PPI was steady at 0.3% while investors anticipated a stagnant performance. The annual PPI data remained stagnant against 0.3% growth in November. Investors projected a de-growth in annual prices of goods and services at factory gates by 0.3%.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Further losses appear on the cards
AUD/USD experienced a sharp sell-off, breaking below the 0.6500 support level to hit multi-day lows and approach the November bottom near the 0.6430 zone, driven by renewed strength in the Greenback.
EUR/USD: Gains remain capped by 1.0600
The renewed strong demand for the US Dollar, combined with political concerns in France, weighed on the European currency, pushing EUR/USD below the 1.0500 support level once again on Monday.
Gold hovers around $2,640 without directional strength
Gold starts the new week on the back foot and trades below $2,650. The renewed US Dollar strength and the recovery seen in the US Treasury bond yields don't allow the pair to stage a rebound despite the risk-averse market atmosphere.
MicroStrategy, MARA add to their holdings amid Bitcoin's quest for new all-time high
MicroStrategy continued its aggressive Bitcoin purchase on Monday after it announced the acquisition of 15,400 BTC at an average purchasing price of $95,976 per token.
Trump warns BRICS over Dollar rival plans
Donald Trump, the incoming U.S. President, has issued a strong warning to BRICS nations over their plans to challenge the dominance of the U.S. dollar in global trade.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.