USDJPY: The foreign exchange market is quiet, the USD is stable
Updated
Most Asian currencies stayed narrow on Wednesday, while the dollar steadied near a six-week high as markets awaited further signals on when the Federal Reserve might start cutting interest rates.
The Australian dollar fell 0.1%, even as January PMI data showed some improvement in manufacturing and services activity. The Aussie, often seen as an indicator of broader risk appetite for Asian markets, is also trading near a seven-week low.
USD steadies near 6-week high with econ. data, Fed meeting underway
The dollar index and dollar index futures both fell 0.1% in Asian trading after rising to their highest since early December in the previous session.
The greenback marked a strong start to 2024 as strong inflation and labor market data showed traders had largely tempered expectations for an early Fed rate cut.
This perception has been exacerbated by a series of hawkish comments from Fed officials over the past week.
The focus now turns to fourth-quarter gross domestic product data, due on Thursday, and PCE price index data - the Fed's preferred inflation gauge - due on Friday. Any sign of recovery in economic growth and inflation gives the Fed more incentive to keep interest rates higher for longer.
The readings also come just days before the Fed's first meeting of 2024, where the bank is widely expected to maintain interest rates at a 23-year high.
But the Fed is still expected to start cutting interest rates this year, which will keep traders watching for any such signals from the meeting.
The Australian dollar fell 0.1%, even as January PMI data showed some improvement in manufacturing and services activity. The Aussie, often seen as an indicator of broader risk appetite for Asian markets, is also trading near a seven-week low.
USD steadies near 6-week high with econ. data, Fed meeting underway
The dollar index and dollar index futures both fell 0.1% in Asian trading after rising to their highest since early December in the previous session.
The greenback marked a strong start to 2024 as strong inflation and labor market data showed traders had largely tempered expectations for an early Fed rate cut.
This perception has been exacerbated by a series of hawkish comments from Fed officials over the past week.
The focus now turns to fourth-quarter gross domestic product data, due on Thursday, and PCE price index data - the Fed's preferred inflation gauge - due on Friday. Any sign of recovery in economic growth and inflation gives the Fed more incentive to keep interest rates higher for longer.
The readings also come just days before the Fed's first meeting of 2024, where the bank is widely expected to maintain interest rates at a 23-year high.
But the Fed is still expected to start cutting interest rates this year, which will keep traders watching for any such signals from the meeting.
Note
The USD/JPY exchange rate fluctuated a lot during the weekComments from BOJ governor Ueda on Tuesday and the bond market are factors weighing on USD/JPY.
Treasury bond yields yesterday recovered strongly during the US trading session with the 10-year yield rising to a peak of 4.19% and has now dropped to 4.158% but overall, still holding above the 200 moving average. day is 4.10%. US bond yields are currently falling across all terms.
The key technical milestone for USD/JPY is currently at 147.51. The 100-hour moving average is seen at 147.93 while the 200-hour moving average is at 147.46. Spot prices are in between those two levels, highlighting a neutral short-term trend.
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