Shockwaves in the FinancialMarkets Yen Surges with BOJ Policy Hints. Singapore (Reuters) – Trader hopes that Japan’s ultra-low interest rates were about to end fueled the yen’s impressive climb on Friday. Which saw it head towards its best week versus the dollar in over five months.
The wide strength of the yen restrained the dollar. Which remained cautious ahead of the highly anticipated U.S. nonfarm payrolls report that is scheduled for release later this Friday.
Governor of the Bank of Japan (BOJ) Kazuo Ueda. Stated on Thursday that the central bank met with Prime Minister Fumio Kishida. The same day and has many alternatives for interest rates to aim after short-term borrowing costs exit negative territory.
The yen surged to multi-month highs versus its main counterparts as a result of the market’s. Interpretation of those remarks as the strongest indication. Yet that the BOJ may soon begin to taper down its very loose monetary policy.
The yen was last stable against the dollar at 144.30. Having risen more than 2% in the previous session to reach a four-month high of 141.60.
Just one month prior, the yen had dropped to 151.92 per dollar. Its one-year low, as rising interest rate differences with the US caused pressure on the currency.
This made traders nervous about possible government action. In Japan to support the currency. As they had done the previous year.
The Japanese yen, which was last trading at 155.67 per euro, was also close to the four-month high on Thursday.
Retracing some of its losses from the previous session. When it lost by over 2%, the Australian dollar recently purchased 95 yen.
The BOJ’s next two-day monetary policy meeting is scheduled on December 18.
According to Ray Attrill, director of FX strategy at National Australia Bank (NAB), “the markets got very excited.” “Yet I believe that many of us were let down since we thought this year would bring about a more significant policy shift. As a result, I’m hesitant to declare that something (a change) will occur on the 19th.
“But obviously, without fire, there would be no smoke. Therefore, I suppose it makes sense for the market to believe that the December meeting has already begun.”
EVERY EAR IS ON PAYROLLS
Ahead of Friday’s U.S. employment report, currency movements outside of the yen were muted in the wider market, as the dollar mostly moved sideways.
The euro was steady at $1.0792, while it was expected to tumble by more than 0.8% on a weekly basis. Similarly, the pound was expected to fall by almost 1% on a weekly basis, having recently purchased $1.2589.
Despite falling 0.05% to 103.63, the US dollar index was still expected to rise 0.4% this week. That would end a run of three weeks of losses as the dollar tries to recover from its steep selloff in November.
“I’m more interested in seeing what happens with the unemployment rate and what happens with average earnings than the nonfarm payrolls numbers,” said Attrill of the NAB.
“Obviously, if we get a big shock on the payrolls – a big downside or upside surprise – the markets’ initial reaction will be governed by that.”
The Australian dollar decreased by 0.05% to $0.6599 in other places.
The offshore yuan in China increased by 0.1% to $7.1560 per dollar.
According to data released on Thursday, the nation’s exports increased in November for the first time in six months, while imports surprisingly decreased.
Amid an uneven recovery in the world’s second-largest economy following the COVID-19 pandemic, market mood remains weak, raising concerns about the country’s economic future.
Earlier this week, Moody’s had warned of a reduction on China’s credit rating and, the next day, had lowered its outlook for Hong Kong, Macau, and large portions of China’s state-owned companies and banks.
The move had “failed to consider” Chinese policymakers’ emphasis on reducing debt over time, according to William Xin, fixed income portfolio manager at M&G Investments. “Moody’s downgrade of China’s rating outlook was motivated by concern over China’s rising debt levels and possible need to bailout local state-owned enterprises,” Xin said.
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