- The Japanese Yen (JPY) is rising after losses last week
- Inflation above 2% & hawkish BoJ comments lift JPY
- The US Dollar (USD) falls after gains last week
- Trump selects Scott Bessent for Treasury Secretary
The US Dollar Japanese Yen (USD/JPY) exchange rate is falling after gains last week. The pair rose 0.26% in the previous week, settling on Friday at 154.74. At 17:30 UTC USD/JPY trades 0.32% lower at 154.28 and is in a range of 153.55 to 155.73.
The Japanese yen is pushing higher after losses last week, benefiting from falling U.S. Treasury yields, and optimism that a rate hike by the Bank of Japan in the December meeting is still on the table.
Japanese inflation, as measured by the consumer price index, was weaker than expected, easing to 2.3% from 2.4%. However, this was still above the central bank’s 2% target, fueling rate hike bets.
Comments from Bank of Japan governor Ueda also kept the prospect of a rate cut in the December meeting alive.
This week, the economic calendar is relatively quiet. The main focus is on Tokyo inflation, due on Friday, which is often considered a lead indicator for nationwide inflation.
The US Dollar is falling across the board on Monday. The US Dollar Index, which measures the greenback against a basket of major currencies, is falling to 107.01 at the time of writing, down 0.49%, after rising 0.8% last week.
The US dollar is falling against its major peers as the market cheers President-elect Trump’s choice for Treasury Secretary.
Trump selected Scott Bessent to be the Treasury Secretary. Bessent is considered an old hand on Wall Street and a fiscal conservative.
Bessent is reportedly in favor of more specific trade tariffs rather than the broad-based tariffs that Trump had previously alluded to. However, Besseent has also previously said that he’s in favor of a stronger U.S. dollar, which means any USD weakness may be short-lived.
Today, the US economic calendar is quiet; however, attention will turn to tomorrow’s FOMC minutes and US core PCE, the Fed’s preferred gauge for inflation.
Core PCE is expected to tick higher to 2.8% year on year in October, which could dampen expectations of the Federal Reserve cutting rates at the December meeting.
Currently, the market is pricing in a 2456% probability of a 25 basis point reduction at the December 17 to 18 meeting.