- The Japanese Yen (JPY) is rising, adding to last week’s gains
- BoJ Governor Ueda hinted to a December hike
- The US Dollar (USD) falls against major peers
- ISM manufacturing PMI falls further
The US dollar Japanese yen (USD/JPY) exchange rate is falling for a fourth straight day. The pair fell -0.46% in the previous week, settling on Friday at 156.18. On Monday at 21.30 UTC, USD/JPY trades -0.46% at 156.46 and traded in a range of 154.67 to 157.20.
The Japanese yen strengthened, and bonds fell after Bank of Japan Governor Ueda gave one of his clearest signals yet that the central bank could hike interest rates in December.
Following hawkish comments by Ueda, yields on the rate-sensitive 2-year Japanese government bond rose 0.04% to 1%, the highest level since 2008.
Ueda said the central bank will weigh up the pros and the cons of tightening monetary policy. Following these comments, the probability of a rate increase at the BoJ meeting on December 19 jumped to 75% from about 60% prior to the meeting.
However, it’s worth noting that the BoJ’s increased hawkishness is at odds with the government’s ambitious spending plans.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is trading at -0.04% at 99.40, extending losses from last week.
U.S. dollar is falling amid rising expectations that the Federal Reserve will cut interest rates by 25 basis points in the December meeting next week.
This week is a busy one for economic data. The ISM manufacturing PMI unexpectedly accelerated its pace of contraction in US factories last month. The manufacturing PMI rose to 48.2. This is below the 50 level that separates expansion.
Delving deeper into the data, new orders and unemployment deteriorated, but production returned to expansion territory. Prices paid, considered an inflation indicator, rose 0.5 points to 58.5 but remain well below April’s high of 69.8.
The ISM services PMI will be released on Wednesday.
