This Monday, in the world of forexthe Japanese yen gains strength in response to the statements of the governor of the Bank of Japan, Kazuo Uedawhich raised hopes that Tokyo is close to leaving back restrictive interest rates. Meanwhilethe dollar US shows signs of weakness as it awaits crucial data on inflation in United States scheduled for this week.
The dollar then experiences a drop before the publication of inflation data in the US scheduled for next Wednesday. Traders are watching to assess whether the world’s largest economy heading towards a “soft landing” and whether the Federal Reserve will have to continue increasing interest rates.
The Japanese yen strengthens 0.67%, trading at 146.85 units per dollar. At one point earlier, it had risen more than 1% to 145.91 yen per dollar, hitting its highest level since September 1. These moves came in response to comments from Kazuo Ueda over the weekend, in which he hinted that the central bank could end its negative interest rate policy as soon as the 2% inflation target is reached. .
The dollar index, which measures the performance of the US dollar against a basket of six currencies that includes the yen, fell 0.1% to 104.74, after hitting near one-week lows. Last week, the dollar had chained eight consecutive weeks of gains.
Dollar against other currencies
In contrast to the weakness of the dollar, the pound sterling advances 0.3% against the dollar, reaching $1.2507 and distancing itself from its three-month low reached last week. For its part, the euro gains 0.23% against the dollar, reaching $1.0725.
The dollar, along with US Treasury yieldss, experienced a rise last week due to a series of favorable economic data which raised expectations that the Federal Reserve could raise interest rates.
Regarding the Chinese yuanin local markets it moves away from its 16-year low reached on Friday after the central bank set the daily midpoint guidance with a stronger bias, signaling growing concern over the currency’s recent weakness. The Chinese yuan gained 0.7%, trading at 7.2935 units per dollar in local markets, and also experienced an increase of 0.7% in international markets, reaching 7.3155 units per dollar.
Weekend data revealed that consumer prices in China returned into positive territory in Augustwhile the decline in factory prices slowed, suggesting an easing of deflationary pressures and signs of economic stabilization.
Additionally, other data released on Monday indicated that Chinese banks granted 1.36 trillion yuan (approximately $186.18 billion) in new yuan loans during the month of August, exceeding analyst expectations and marking a strong increase compared to the month of July.
Source: Ambito
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