The Japanese Yen Remains Under Pressure: The Japanese yen fell to over 156 yen per dollar,
hitting its lowest levels in a week.
The dollar rose after a Federal Reserve official projected a more hawkish outlook on U.S. interest rates than markets had anticipated.
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The Dollar Continues Gains After Harsh Remarks
The Japanese Yen Remains Under Pressure
The Dollar Continues Gains After Harsh Remarks
The dollar index rose to 104.7 on Tuesday, continuing the previous session’s gains
after Atlanta Federal Reserve President Raphael Bostic said
it would take some time before the central bank is confident that inflation will return to 2%,
reiterating that cutting interest rates once this year would only be necessary.
He added, “Our new stable state is likely to be higher than people have known over the past decade,
possibly returning to what we were in the ’90s and early 2000s.”
However, traders remained cautious about the timing and extent of the Federal Reserve rate cuts this year,
with expectations for rate cuts in September and November.
Investors are now looking forward to more central bank comments
and the latest Federal Open Market Committee meeting minutes this week to further guide expectations.
The dollar strengthened across all sectors, with the most notable buying activity against the Australian, New Zealand, and Japanese yen.
Japanese Yen Remains Under Pressure
The Japanese yen fell to over 156 yen per dollar,
hitting its lowest levels in a week as the dollar rose after a Federal Reserve official
projected a more hawkish outlook on U.S. interest rates than markets had anticipated.
This means the stark interest rate differentials between the U.S. and Japan
will continue to pressure the yen as carry trade remains attractive.
Meanwhile, markets were cautious about pushing the yen to new lows amid the ongoing risk of government intervention.
Japanese Finance Minister Shunichi Suzuki expressed concerns about
the negative impact of a weak currency on wage increases.
For further guidance, investors are now looking ahead to a series of economic reports in Japan this week,
including trade, inflation, and business activity data.
The New Zealand Dollar Stabilizes
The New Zealand dollar traded around 0.61 USD as traders prepared for Wednesday’s Reserve Bank of New Zealand’s interest rate decision.
The central bank is widely expected to leave the official cash rate at 5.5% for the seventh consecutive meeting.
Therefore, the market’s focus will be on whether it signals that rate cuts could begin
sooner than the mid-2025 start point highlighted in the February forecasts.
Last week, data showed that the country’s two-year inflation expectations fell to their lowest
level in nearly three years during the second quarter,
sparking speculation that the Reserve Bank of New Zealand might consider cutting interest rates later this year.
The Japanese Yen Remains Under Pressure