The early Asia-Pacific session saw the Australian dollar emerge as the strongest among the major currencies while the yen was the weakest.
Basically, the Australian CPI came in slightly above expectations at 3.5% vs. 3.4%, but the good news is that it appears to be moving lower after peaking at 4.0% in May. The post-upturn cycle low was 3.4% from December to February.
The AUD/USD pair rose 0.13%, which is not a big deal, but it rose 0.39% against the Japanese yen. The Japanese yen got its boost from some hesitant comments from the Bank of Japan’s Himeno.
Himeno highlighted the current Instability in financial and capital marketsstressing the need for the Bank of Japan to monitor these developments carefully. maximum alertnessHe said the Bank of Japan will carefully assess how these market changes, both domestic and international, will affect economic activity, prices and associated risks, as well as the level of confidence in their economic outlook.
He also commented that the Bank of Japan is Ready to adjust its monetary policy if it gains confidence that its expectations for economic activity and prices will be met (Referring to raising interest rates), but he stressed the importance of implementing monetary policy appropriately to achieve the 2% inflation target in a sustainable and stable manner, while maintaining close communication with market participants and other stakeholders.
He pointed out that Recent market volatility, such as weak stocks and a stronger yen, needs to be monitored.He acknowledged the importance of improving the Bank of Japan’s approach to estimating the neutral interest rate as a useful reference. However, he cautioned that estimating the neutral interest rate does not automatically indicate the correct policy path.
Looking ahead to fiscal years 2025 and 2026, Himeno expects a balanced situation where inflation is in line with the price stability target and economic growth slightly exceeds takeoff speed. Finally, he also acknowledged that the recent appreciation of the yen may ease import costs and profit pressures on small and medium-sized companies, but it may also reduce yen-denominated profits for Japanese export industries and multinationals.
The market interpreted the wobbly comments as more dovish, pushing the USD/JPY and other crosses higher (JPY lower).
For USD/JPY, the 50% retracement of the move up from the 2023 low comes in at 144.58. A move above that would prompt traders to look at the 100-hour moving average at 144.899 (and move lower). We recall from yesterday that the moving average stopped the rise.
For EUR/USD today, the price reversed some of yesterday’s gains and is heading towards the rising 100-hour moving average at 1.11549. Like the USD/JPY pair, the price stopped at the 100-hour moving average yesterday and then reversed its direction higher.
Japan’s Nikkei 225 index fell -0.22%.
Spot gold was down $10.64 or -0.43% at $2,514 after closing at a fresh record high yesterday.
Bitcoin is back below $60,000 after failing to break above the 100/200-day moving average near $63,550 last week and on Monday. On Tuesday, the price dropped to a low of $58,900 before rallying modestly.
Comments are closed, but trackbacks and pingbacks are open.