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BOJ: Yen Declines as Hopes Fade for December Shift; China’s Yuan Faces a big Slide.

BOJ: Yen Declines as Hopes Fade for December Shift; China's Yuan Faces a Slide.

The U.S. dollar strengthened against the Japanese yen on Monday as a report suggested that the Bank of Japan BOJ was unlikely to end negative interest rates in December, contrary to some investors’ expectations, thereby triggering yen declines.

Dollar Rebounds, Undoing Recent Yen Declines as BOJ Signals Policy Continuity

Experiencing a 0.78% surge, the greenback reached 146.46 yen, overturning a recent Yen Declines . This shift follows speculations last week about the potential termination of negative interest rates by the BOJ.

BOJ Officials Cite Insufficient Evidence for Immediate Policy Adjustment

Insiders suggest that BOJ officials remain unconvinced about the strength of wage growth, delaying a decision to end the ultra loose monetary policy in December. Bloomberg’s report underscores the cautious stance of the Bank of Japan.

Dollar Index Rises, Impacting Currency Market with Yen Declines

The dollar’s upward trajectory against the yen contributed to a 0.15% increase in the dollar index, reaching 104.12, Analysts caution against speculative moves related to the Bank of Japan, pointing to potential opportunities in January.

Read more : China Forex Reserves Surged in November A Exports Rose Marginally

Stability Persists for Euro and Sterling

The euro maintained stability at $1.0761, in close proximity to Friday’s three week low of $1.0724, while sterling saw marginal change at $1.2551, Market attention remains fixed on U.S. inflation data and central bank deliberations.

Focus on U.S. Inflation and Central Bank Decisions Heightens

Investor focus intensifies on U.S. inflation figures for November, scheduled for release on Tuesday, along with the Federal Reserve’s interest rate decision on Wednesday. Expectations lean towards a steady interest rate from the Fed amid a backdrop of U.S. economic resilience.

U.S. Labor Market Displays Resilience with Accelerated Job Growth

Recent data underscores the resilience of the U.S. labor market, revealing accelerated job growth in November and a reduced unemployment rate of 3.7%, These developments challenge earlier predictions of imminent rate cuts from the Federal Reserve in early 2023.

China Confronts Deflationary Pressures Amid Economic Concerns

Weekend data from China reveals a substantial decline in consumer prices and heightened factory gate deflation in November, indicating growing deflationary pressures. Doubts emerge about China’s economic recovery amid weak domestic demand.

Yuan Records Three Week Low Amidst Economic Uncertainty

China’s yuan experienced a decline to a three week low in both onshore and offshore markets, with the onshore rate settling at 7.1791 per dollar. The Australian dollar, often viewed as a proxy for the yuan, also registered a 0.34% decrease to $0.6555.

Read more : Australian Dollar Descends Toward Psychological Threshold

Advocacy for Policy Support in China Amidst Inflationary Concerns

Analysts, including Alvin Tan of RBC Capital Markets, highlight the absence of a robust economic revival in China, signaling the persistence of weak inflation and the necessity for additional policy support.


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