The dollar last bought 150.25 yen, having already surpassed the 150 per dollar level for six consecutive sessions and prompting warnings from Japanese officials in a bid to stabilise the currency
The yen was near a three-month low against the dollar on Tuesday as sticky U.S. inflation firmed the case for higher-for-longer interest rates, contrasting with a recession in Japan and market doubts about a near-term exit from its easy policy.
In Asia, China’s loan prime rate (LPR) decision takes centre stage, where it is widely expected to cut its benchmark mortgage reference rate to boost the country’s faltering economic growth.
Ahead of the outcome, the offshore yuan edged slightly down to 7.2143 per dollar.
The dollar last bought 150.25 yen, having already surpassed the 150 per dollar level for six consecutive sessions and prompting warnings from Japanese officials in a bid to stabilise the currency.
Higher-than-expected U.S. producer prices and consumer prices data past week further trimmed market expectations of how soon, and by how much, the Fed could cut interest rates this year, with futures pointing to just around 90 bps worth of cuts in 2024, down from nearly 160 bps at the end of 2023.
On the other hand, Japan’s economy, which unexpectedly dipped into a recession in the last quarter of 2023 on sluggish consumption and capital expenditure, has prompted investors to rethink the chances of a near-term exit by the BOJ from its ultra-loose monetary policy.
At the moment, the data coming in from Japan is telling us that it is not as rosy as what the Bank of Japan would like to see in order to begin moving away from negative interest rates, said Rodrigo Catril, senior currency strategist at NAB.
In the wider market, the dollar edged higher, though moves were largely subdued due to Monday’s holiday in the US for Presidents’ Day.
Against the dollar, the euro dropped 0.09% to $1.0770, while sterling slipped 0.06% to $1.2588.
We are still stuck in these ranges to some extent, and waiting for more meaningful or material data to swing us one way or the other, said NAB’s Catril. So for that, data coming from the U.S. remains paramount.
