the yen remains below the psychological barrier of 145 per dollar this Monday, July 3, while the dollar backed off after the US economic data last week, which showed a slight moderation of inflation and consumer spending.
The yen then weakens 0.09% to 144.45 at the beginning of the second semester of the year, having lost 9% against the dollar in the first six months of 2023. In relation to the euro, the yen hovered around 157.66, just below the 15-year low from 158 it reached last week. She too rose to 183.58 per pound sterlingits highest since December 2015.
The Asian currency briefly topped 145 to the dollar on Friday, hitting a nearly eight-month low of 145.07, as investors are watching whether the Japanese authorities will intervene in the foreign exchange market. The Finance Minister, shunichi suzukisaid on Friday that Japan would take appropriate measures in response to the excessive weakening of the yen, in line with earlier comments by ministers and government officials. Suzuki’s comments helped curb losses on the last day of June.
Mark ChandlerBannockburn Forex Chief Market Strategist said: “The intervention is best conceived as an escalation spiral. Among the highest rungs is coordinated intervention. The lowest rungs of the escalation spiral are different types of verbal intervention.”
Japan bought yen in September, its first intervention in the market since 1998, after a decision by the Bank of Japan (BoJ) to maintain an ultra-loose monetary policy made the yen fall 145 to the dollar. He intervened again in October, when the yen crashed to a 32-year low of 151.94.
Despite this, Japanese business confidence improved in the second quarter due to the relaxation of supply restrictions and the removal of the brakes imposed by the pandemic, which increased factory output and consumption, according to a central bank survey. This indicates that the economy is heading towards a stable recovery..
Federal Reserve: markets on the lookout
This week, investors will be watching the minutes of the Federal Reserve’s June meeting American, which will be published on Wednesday. The central bank decided to keep interest rates unchanged at its meeting in June, but suggested that borrowing costs might have to rise by as much as half a percentage point this year.
Last week’s economic data revealed that the US economy was strong, allaying fears of a recessionbut increasing expectations that the Federal Reserve would maintain a restrictive monetary policy.
However, data on Friday indicated lower-than-expected inflation in Mayand consumer spending slowed significantly, confirming that the Fed’s actions are having the desired effect.
“Contrary to expectations, the US economy is not slowing down,” Citi strategists said in a statement to clients. “Employment is seeing surprisingly strong growthwhich keeps the labor market tight and provides the purchasing power needed to drive consumption of services“.
According to CME’s FedWatch tool, the probability that the Federal Reserve will raise interest rates by 25 basis points at its July meeting is 84%.
Dollar Vs. Yen: other data that investors analyze
Investors will also be watching the Job Openings and Job Turnover Survey (JOLTS) and the monthly payroll report from the work Departmentwhich will be released later this week and will help gauge the US job market.
NatWest Markets strategists predict the cycle of rate hikes has come to an endbut point out that if the inflation data do not show enough progress, Fed leaders could raise rates by another 25 basis points in July. “The decision to act or not will depend more than ever on the data,” they said.
In relation to a basket of currencies, the dollar is trading at 102.86, having fallen 0.4% on Friday. After an increase close to 2% In the first half of the year, the euro started the third quarter subdued, standing at $1.0916, an increase of 0.05%.
The pound sterling operates at 1.2704 dollars, unchanged on the day, after rising 5% in the first six months of the year.
The Chinese yuan achieved stability after hitting almost eight-month lows against the dollar last week, thanks to intensified efforts by the central bank to stabilize the badly weakened local currency.
He Australian dollar It is up 0.02% at US$0.667, while the New Zealand dollar is up 0.42% at US$0.615.
Source: Ambito
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