- The Japanese Yen (JPY) is rising as BoJ rate hike bets rise
- Japanese authorities stand ready to intervene
- The US Dollar (USD) falls against major peers
- Retail sales slow and PPI cools
The US dollar Japanese yen (USD/JPY) exchange rate is falling after gains yesterday. The pair rose 0.33% in the previous session, settling on Monday at 156.91. On Tuesday at 21.30 UTC, USD/JPY traded -0.59% at 155.99 and traded in a range of 155.80 to 156.98.
The Japanese yen is strengthening amid a weaker U.S. dollar and amid diverging central bank paths.
The yen has moved away from a 10-month high reached at the end of last week as expectations of a BoJ rate hike rise. The recent weakening of the yen has raised the chances of the central bank hiking rates possibly as soon as next month.
The yen has fallen sharply in recent weeks, and Japanese bond yields have surged on concerns over PM and fiscal dove Takaichi’s policies.
Japanese authorities will be pleased that the yen is starting to recover from recent lows, amid speculation that they could intervene to curb the currency’s decline.
The authorities said that Tokyo is prepared to actively intervene in the currency markets to offset the negative economic effects of a weak yen.
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 -0.39% at 99.79.
The U.S. dollar is falling after data reinforce expectations of a Fed rate cut.
US retail sales were weaker than expected, rising 0.3% month on month in September, down from 0.6% in August, below the 0.4% expected.
Meanwhile, the producer price index showed that wholesale inflation cooled, rising 2.6% in the 12 months to September, down from 2.7% in August.
The data supported expectations that the Federal Reserve will reduce interest rates by 25 basis points next month. The market is pricing in an 83% probability of a cut next month. This was up from below 40% last week.
Recent Federal Reserve officials have also supported rate cuts. New York Fed president John Williams, Federal Reserve governor Christopher Waller, San Francisco Fed president Mary Daly, and Fed governor Stephan Miran have all raised concerns over a deteriorating jobs market as a reason to cut rates.
