- The Japanese Yen (JPY) is rising after losses yesterday
- BoJ hinted to a rate hike next week
- The US Dollar (USD) falls against its major peers
- US core CPI eased to 3.2% YoY
The US dollar Japanese yen (USD/JPY) exchange rate is falling after gains yesterday. The pair rose 0.3% in the previous session, settling on Tuesday at 157.96. At 21:30 UTC, USD/JPY trades -0.9% lower at 156.50 and trades in a range of 155.94 to 158.00.
Yen is rising after hawkish comments from Bank of Japan governor Ueda ahead of next week’s central bank meeting. Ueda said the central bank would debate whether to raise interest rates next week, signaling the intention to raise borrowing costs, should the economy continue to improve.
His comments echoed those made by Bank of Japan deputy Himino earlier in the week.
The Japanese economy and the chances of a Bank of Japan rate hike depend greatly on incoming President Trump’s economic policy and the momentum of this year’s wage negotiations.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is down 0.37% to 108.59 at the time of writing, falling for a second straight day.
Following US inflation data, the US dollar is falling sharply against its major peers. Headline inflation came in line with expectations, rising to 2.9% year on year, up from 2.7%. However, core inflation, which removes more volatile items such as food and fuel, unexpectedly eased to 3.2% annually, down from 3.3%.
The data will be well received by the Federal Reserve, but policymakers will likely want to see several more subdued inflation reports before raising rate cut expectations.
The market currently says just one rate cut this year by the Fed, towards the end of the year. The data is also helped to ease inflationary worries ahead of Trump’s inauguration, where he is expected to implement inflationary policies such as tax cuts and trade tariffs. Following the data, US treasury yields eased.
