Bonds remained high pending decisions from the US Federal Reserve.
He dollar rose this Monday against the yenresuming his rise after the top official of the Bank of Japan noted that further tightening of monetary policy was on the horizon, but was vague about the timing of such an increase.
The governor of the Bank of Japan, Kazuo Uedareiterated that the economy was progressing toward sustained, wage-driven inflation, and warned against keeping borrowing costs too low, leaving open the possibility of another interest rate hike as soon as next month. These were his first comments on monetary policy since the victory of donald trump in the presidential elections of USA.
In this scenario, the dollar strengthened 0.17% to 154.6 yen. It had broken a four-session rally against the Japanese currency on Friday after Finance Minister, Katsunobu Katowarned on Friday that Japanese authorities would take measures to combat excessive movements in the exchange rate.
He dollar indexwhich measures the greenback against a basket of currencies, fell 0.5% to 106.20, and the euro rose 0.54% to $1.0598. The index hit a more than one-year high last week of 107.07 and has been rising on expectations that a Trump victory could result in higher tariffs and stoking inflation, something that would slow the path of rate cuts. of the Federal Reserve.
Bonds remain high while waiting for the Fed
Meanwhile, the returns of the United States Treasury bonds held near multi-month highs on Monday, boosted by bets of less aggressive rate cuts by the Fed in the future. The benchmark 10-year yield was steady at 4.4256%, while the two-year yield was at 4.2823%.
Futures imply a 60% chance that the Fed will ease monetary policy by a quarter point in December and only have 75 basis points of cuts priced in through the end of 2025, compared with more than 100 a few weeks ago.
This came after comments by the president of the Federal Reserve, Jerome Powellfrom last week, which indicated that borrowing costs could remain high for longer.
“With the changes underway in the policy of immigration, politics tariff and politics fiscal, “Fed officials would still tread more carefully given the inflationary impact these policies pose,” said Thierry Wizman, global rates and currencies strategist at Macquarie.
The change in perspectives on rates and the inflation in the United States lifted the dollar to a one-year high last week. The dollar index, which measures the currency against a basket of six others, was steady at 106.69, just below last week’s peak of 107.07.
Source: Ambito
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