The dollar meandered against yen and other major currencies on Tuesday, amid uncertainty over the timing of the Federal Reserve’s next rate increase. Lack of clarity over the Bank of Japan’s policy outlook also led the yen to trade sideways.
The dollar’s DXY, -0.09% rising momentum since Friday’s U.S. jobs data against the yen and the euro has eased, weighed on by skepticism over the pace of the Federal Reserve’s rate increases.
“(Fed official) comments are suggesting they’ll do at least once this year, but the market isn’t convinced,” said Kosuke Hanao, head of FX at HSBC in Tokyo.
Hanao himself believes that either the Fed will act in September and pass in December, or leave the rate unchanged in September and strongly signal an increase in December.
More Fed official speeches are scheduled later this week, including one by Federal Reserve Bank of San Francisco President John Williams.
The dollar USDJPY, -0.06% was at ¥103.66, compared with ¥103.44 late Monday in North American trading hours, according to EBS. The euro EURUSD, +0.0987% was unchanged at $1.1148. The British pound GBPUSD, +0.3157% was at $1.3325, from $1.3303, after getting a boost Monday on the release of surprisingly strong U.K. services activity data.
Michiyoshi Kato, senior vice president of forex sales at Mizuho Bank, said BOJ Gov. Haruhiko Kuroda probably wants to weaken the yen a bit more to help generate a 2% inflation, but he doesn’t want to trigger a massive devaluation of the Japanese currency either. Kato said that is likely to be a key issue which the BOJ will try to address at its planned comprehensive review of monetary policy later this month.
“So long as crude oil prices remain low, the weak yen is the only way to achieve 2% inflation,” he said. “But if you do that too much, you’ll cross the point after which there is no way back.”
BOJ’s massive bond buying had some effects on weakening the yen, but it wasn’t enough to achieve a 2% inflation. A negative reserve rate of 0.1% triggered yen buying. Meanwhile, Kuroda has ruled out direct financing of government debt.
Hanao pointed out that the BOJ governor in a speech Monday delivered a clear message that the upcoming policy review would lead to more easing — not less — but “details were unclear.”
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The dollar’s DXY, -0.09% rising momentum since Friday’s U.S. jobs data against the yen and the euro has eased, weighed on by skepticism over the pace of the Federal Reserve’s rate increases.
“(Fed official) comments are suggesting they’ll do at least once this year, but the market isn’t convinced,” said Kosuke Hanao, head of FX at HSBC in Tokyo.
Hanao himself believes that either the Fed will act in September and pass in December, or leave the rate unchanged in September and strongly signal an increase in December.
More Fed official speeches are scheduled later this week, including one by Federal Reserve Bank of San Francisco President John Williams.
The dollar USDJPY, -0.06% was at ¥103.66, compared with ¥103.44 late Monday in North American trading hours, according to EBS. The euro EURUSD, +0.0987% was unchanged at $1.1148. The British pound GBPUSD, +0.3157% was at $1.3325, from $1.3303, after getting a boost Monday on the release of surprisingly strong U.K. services activity data.
Michiyoshi Kato, senior vice president of forex sales at Mizuho Bank, said BOJ Gov. Haruhiko Kuroda probably wants to weaken the yen a bit more to help generate a 2% inflation, but he doesn’t want to trigger a massive devaluation of the Japanese currency either. Kato said that is likely to be a key issue which the BOJ will try to address at its planned comprehensive review of monetary policy later this month.
“So long as crude oil prices remain low, the weak yen is the only way to achieve 2% inflation,” he said. “But if you do that too much, you’ll cross the point after which there is no way back.”
BOJ’s massive bond buying had some effects on weakening the yen, but it wasn’t enough to achieve a 2% inflation. A negative reserve rate of 0.1% triggered yen buying. Meanwhile, Kuroda has ruled out direct financing of government debt.
Hanao pointed out that the BOJ governor in a speech Monday delivered a clear message that the upcoming policy review would lead to more easing — not less — but “details were unclear.”
Click here for Free Signals OR Give A Missed Call : +60350219047 Follow Us On Twitter : www.twitter.com/epicresearchmy Like Us On Facebook : www.facebook.com/EpicResearchMalaysia Need Any Assistance Feel Free To Mail Us at : info@epicresearch.my
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