- The Japanese Yen (JPY) is falling after two days of losses
- The BoJ is expected to hike rates by 25 bps
- The US Dollar (USD) rises against major peers
- US stocks fell on AI worries fueling USD safe-haven demand
The US dollar Japanese yen (USD/JPY) exchange rate is rising after two days of losses. The pair fell -0.32% in the previous session, settling on Tuesday at 154.72. On Wednesday at 21.30 UTC, USD/JPY trades +0.66% at 155.74 and traded in a range of 154.52 to 155.75.
The yen fell on Wednesday, moving away from a monthly high, even as robust data reinforced expectations of a BoJ rate hike this week.
Exports increased 6.1% in November, surpassing forecasts of 4.8%, marking the strongest growth in nine months. Meanwhile, core machinery orders, a key leading indicator of capital expenditure over the next 6 to 9 months, also jumped 7%.
The Bank of Japan is widely expected to raise its policy rate by 25 basis points to 0.75% on Friday. Attention will be on Governor Ueda’s post-meeting comments for guidance on the propeller T trajectory for next year. I’m speculating that it could reach 1% by July.
The US dollar is rising across the board. The US dollar index, which measures the USD against a basket of currencies, is up 0.24% to 98.38, after two days of losses.
The U.S. dollar is rising on Wednesday amid a risk-off mood in the markets. U.S. stocks slumped on Wednesday, with tech leading the losses amid AI-related concerns. Concerns about an AI bubble resurfaced as Nvidia shares dropped almost 4%.
Still, the U.S. dollar fell from session highs after we spoke with Federal Reserve Governor Christopher Waller, who said the U.S. central bank has room to cut rates amid rising job-market weakness. His comments followed yesterday’s nonfarm payrolls report, which showed mixed results: headline job creation of 64,000, but unemployment rose to 4.6%.
However, Governor Christopher Waller’s comments contrast with commentary by Atlanta Fed President Raphael Bostic, who said earlier in the week that he did not think the Fed’s decision to cut rates was warranted, and he pencilled in no further rate cuts for 2026.
