- The Japanese Yen (JPY) rises after recent losses
- JGB bond yields rise on fiscal spending expectations
- The US Dollar (USD) falls against its major peers
- Trump denied rumours he would fire Powell
The US dollar Japanese yen (USD/JPY) exchange rate is falling after two days of gains. The pair rose 0.72% in the previous session, settling on Tuesday at 148.78. At 20:30 UTC, USD/JPY is 0.7% lower at 147.86 and in a range of 146.92 to 149.18.
The yen experienced wild swings against the USD after rumours intensified that Trump was on the verge of sacking Federal Reserve chair Jerome Powell. Trump later came out and denied the rumours.
Meanwhile, the yen was moving higher across the board after the 10-year JGB yield rose 1.6% its highest level since 2008. The rise in yields comes as the market expects increased fiscal spending ahead of the election. Speculation is centered on numerous stimulus measures, including a possible cut to the consumption tax, aimed at boosting economic activity.
Attention and we’ll turn to Japan’s trade balance data, which is due for release on Thursday, followed by the national CPI inflation report on Friday, which could provide further clues over the Bank of Japan’s policy direction.
The US dollar is falling against its major peers. The US dollar index, which measures the USD against a basket of peers, is rising by 0.3% to 98.29, snapping a 7-day winning run.
The U.S. dollar came under pressure on Wednesday after weaker-than-expected wholesale inflation forecasts, which suggested that the Federal Reserve could still cut interest rates this year.
US PPI, which measures inflation at the factory gate, was unchanged at 0% month on month in June after an upwardly revised 0.3% increase in May. On an annual basis, US wholesale prices rose 2.3%.
Delving deeper into the figures, a sharp decline in the cost of travel-related services offset a pickup in the price of goods. The data suggest that firms and manufacturers are cautiously assessing the extent to which they can pass on higher US tariff costs to their customers.
The data comes after US consumer price inflation yesterday rose to 2.7% YoY, up from 2.4%.
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