FOREX-Yen hands back gains, dollar waits on CPI

Credit: REUTERS/DADO RUVIC

SINGAPORE, Dec 12 (Reuters) - The yen nursed losses on Tuesday as traders walked back expectations for a Japan rate hike, while the dollar was waiting on U.S. inflation data and a slew of central bank meetings.

The dollar rose about 0.9% on the yen overnight JPY=EBS. At 145.96 yen it is about 3% above a low touched last week after remarks on the challenging outlook from Bank of Japan Governor Kazuo Ueda were taken as a hint that a policy shift was imminent.

Bloomberg reported on Monday, citing sources, that BOJ officials see little need to rush out of negative rates, triggering a reversal of the yen's rally and gains in Japan's stock and government bond markets. .TJP/

"Wages growth is still weak," Commonwealth Bank of Australia analyst Kristina Clifton pointed out in a note.

"We do not expect the BOJ to end negative interest rates until Q2 24 at the earliest ... The wide differential between U.S. and Japanese 10-year government bond yields can continue to support dollar/yen."

Other currency pairs were broadly steady with the euro EUR=EBS at $1.0765 as the market focus turns on U.S. inflation data, due at 1330 GMT, and beyond it to Wednesday's Federal Reserve policy decision.

Sterling GBP=D3 held at $1.2555. The Australian dollar AUD=D3, floated four decades ago on Tuesday, was kept to $0.6564 and the New Zealand dollar NZD=D3 to $0.6122.

The dollar has been sliding since October's benign U.S. inflation report but found a footing on upbeat jobs data published on Friday. The Fed is considered certain to hold rates at 5.25%-5.50% this week, putting the focus on the so-called dot plots for rates and Chair Jerome Powell's press conference.

Expectations 0#FF: for a March cut have ebbed, though May is seen as a better-than 3/4 chance. FEDWATCH

Economists polled by Reuters expect headline inflation to have been flat for November, and core inflation to keep steady at an annual pace of 4% - well above the Fed's 2% target.

"Overly exuberant 'pivot zealots' may be set up for stumbles over the markets-Fed expectations gap," said Mizuho economist Vishnu Varathan.

"Of particular interest will be where the median rate forecast for 2024 lands," he said in a note.

"Markets are banking on more emphatic cuts of (about) 100bp whereas the Fed may be more stoic with more measured reductions."

The European Central Bank, Bank of England, Norges Bank and the Swiss National Bank then all meet on Thursday, with Norway the only one considered a possible hiker. There is also a risk the SNB dial back its support for the franc in FX markets.

The franc made an almost nine-year high on the euro EURCHF=EBS last week and traded a little softer than that at 0.9455 francs to the common currency on Tuesday.

========================================================

Currency bid prices at 0049 GMT

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=EBS

$1.0766

$1.0765

+0.01%

+0.48%

+1.0766

+1.0764

Dollar/Yen

JPY=EBS

145.7650

146.1950

-0.27%

+0.00%

+146.1600

+145.7350

Euro/Yen

EURJPY=EBS

156.94

157.31

-0.24%

+0.00%

+157.3400

+156.8800

Dollar/Swiss

CHF=EBS

0.8779

0.8787

-0.08%

+0.00%

+0.8785

+0.8780

Sterling/Dollar

GBP=D3

1.2562

1.2555

+0.00%

+3.82%

+1.2562

+1.2555

Dollar/Canadian

CAD=D3

1.3571

1.3574

-0.01%

+0.00%

+1.3579

+1.3572

Aussie/Dollar

AUD=D3

0.6570

0.6568

+0.04%

-3.62%

+0.6570

+0.6564

NZ Dollar/Dollar

NZD=D3

0.6125

0.6124

+0.02%

-3.54%

+0.6126

+0.6120

All spots FX=

Tokyo spots AFX=

Europe spots EFX=

Volatilities FXVOL=

Tokyo Forex market info from BOJ TKYFX

World FX rates https://tmsnrt.rs/2RBWI5E

(Reporting by Tom Westbrook; Editing by Sonali Paul)

((tom.westbrook@tr.com; +65 6973 8284;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.