Dollar weakens, yen strengthens ahead of Trump’s inauguration By Reuters

Written by Laura Matthews

NEW YORK (Reuters) – The U.S. dollar weakened against the yen on Thursday, as softer-than-expected U.S. economic data and growing confidence for a Federal Reserve interest rate hike of Japan fell almost one month against the Japanese. money.

Recent statements from BOJ Governor Kazuo Ueda and his deputy Ryozo Himino made it clear that a rate hike will be discussed at least at next week’s policy meeting. Markets see about a 79% chance of a 25-point increase.

Japan’s annual inflation was steady at 3.8% in December on higher food costs, data showed on Thursday.

The greenback was down 0.81% against the yen at 155.2, its lowest since Dec. 19.

“We expected some volatility in the US dollar, which (would) be stronger against several currencies, but weaker against the Japanese yen,” it said. said Kristina Hooper, chief global market strategist, at Invesco US. “I think the general direction for the JPY and the general direction for the dollar suggests that we will have a stronger yen against the dollar.”

The dollar was weak against the euro, which rose 0.1% to $1.03, as traders digested more mixed economic news to gauge the prospect of a rate cut by the Federal Reserve this year.

US retail prices rose 0.4% last month after unchanged from the previous month, data from the Commerce Department’s Census Bureau showed.

Meanwhile, the number of Americans filing new claims for unemployment benefits rose more than expected last week, but remained at levels that reflect a healthy unemployment market. workers.

The Philadelphia Fed Business Index, which rose to 44.3 in January, was the only surprise since the forecast was for a minus 5 reading.

The rest – a measure of the value of the greenback relative to a basket of foreign currencies – down 0.05% to 108.97.

Amo Sahota, director of Klarity FX in San Francisco, said Wednesday’s low consumer price data continued to drive markets, raising expectations that the Fed would continue to cut interest rates. two this year.

But the sign of disinflation occurs when inflation can rise again, according to the business plan of the next administration.

“Mostly the markets are in a good position, but in the same way until we finish Monday,” said Sahota.

It comes as Donald Trump returns to the White House with some policy analysts expecting it to boost growth and increase price pressure.

Another focus for markets on Thursday was the hearing of Trump’s nomination of Scott Bessent to lead the Treasury Department.

Bessent is expected to keep a leash on US deficits and use tariffs as a negotiating tool, reducing the expected inflationary impact of economic policies expected from the Trump administration.

“So far, he hasn’t said anything too far from what we expected,” Sahota said. “This is a government … that has to cut back on spending. So, we’re looking at government spending going down. They really want to implement tax cuts, we’ve seen that topic come up. .”

Traders increasingly worried about falling inflation responded with relief from Wednesday’s US data, buying commodities and sending the benchmark 10-year Treasury falling below the fundamentals. 13.

Treasury yields fell on Thursday, after Federal Reserve Governor Christopher Waller said three or four cuts this year are still possible if US economic data weakens further.

Sterling was down 0.13% at $1.2228 against the dollar, having also fallen sharply against the yen on Thursday as investors focused on the divergence in monetary policy following a sell-off in gilts and the pound. last week.

seen in the front lines of the risk of rates, was entered near the weak end of its trading group at 7.3316. (CNY/)

Money

bid

prices in

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January

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pm GMT

Descripti RIC Last US Pct YTD Pct High Low

about Close Change Bid

The previous one

A meeting

Dollar 108.96 109.03 -0.05% 0.43% 109.4 108.

index 82

Euro/Dollar 1.0299 1.029 0.1% -0.51% $1.0315 $1.0

i am 26

Dollar/Ye 155.19 156.505 -0.83% -1.36% 156.42 155.

n 135

Euro/Yen 159.84 160.97 -0.7% -2.07% 161.08 159.

77

Dollar/Sw 0.9111 0.9129 -0.18% 0.41% 0.9142 0.91

iss

Sterling/ 1.223 1.2245 -0.09% -2.19% $1.226 $1.2

$173

Dollar/Ca 1.4393 1.4339 0.39% 0.1% 1.4403 1.43

Nadia 24

Aussie/Do 0.621 0.6227 -0.24% 0.39% $0.6248 $0.6

192

Euro/Swiss 0.9382 0.9389 -0.07% -0.12% 0.9394 0.93

s 71

Euro/Star 0.8418 0.8402 0.19% 1.75% 0.8438 0.84

say 07

NZ 0.5606 0.5616 -0.11% 0.25% $0.5633 0.55

Dollar/Dollar 82

ll

Dollar/No 11.3595 11.3256 0.3% -0.05% 11.4002 11.3

pay 108

Euro/Noww 11.701 11.6542 0.4% -0.58% 11.714 11.6

i am 48

Dollar/Sw 11.1507 11.1536 -0.03% 1.21% 11.1937 11.1

Eden 288

Euro/Swed 11.485 11.4806 0.04% 0.16% 11.499 11.4

at 75

(This story has been corrected to clarify that the maximum BOJ rate increase is 25 basis points, not 50 basis points, in paragraph 2)