2024-03-11 09:29:45
The yen continued to rise on Monday as an upward revision to Japan’s growth figures bolstered investors’ bets on an interest rate hike this month, while bitcoin hit a new record high at more than $71,600.
The dollar was down 0.28% at 146.66 yen as the Japanese currency climbed. Earlier, it plunged as low as 146.54, which took it to the limit of 146.48, its lowest level in five weeks.
A growing number of Bank of Japan policymakers are supportive of ending negative rates at their March 18-19 meeting, sources told Reuters, amid expectations sharp salary increases in the largest Japanese companies. The results of this year’s annual “shunto” wage negotiations are expected on Wednesday.
At the same time, an upward revision to Japan’s economic growth last quarter means the country avoided a technical recession, strengthening the argument that the economy could withstand policy tightening.
“At the margins, the upward revision to GDP growth in the fourth quarter has made market participants more confident that the BOJ will soon exit its current loose monetary policy,” said Lee Hardman, a financial analyst. currencies at Japanese bank MUFG, in a note to clients.
The dollar index was little changed at 102.69, not far from the near two-month low of 102.33 hit Friday when monthly employment figures signaled a cooling in the U.S. labor market, holding the Reserve federal government on the path to policy relaxation.
Traders currently see June as the most likely month for the first cut, bets that could be changed by important Consumer Price Index inflation data on Tuesday.
Elsewhere, crypto mania continued, with bitcoin hitting a new record high of $71,677.
The cryptocurrency has been boosted by an influx of liquidity into new spot bitcoin exchange-traded funds, as well as hopes that the Federal Reserve will soon cut interest rates.
The euro remained stable at $1.0941 after reaching $1.0980 on Friday, for the first time since January 12. The European Central Bank left interest rates at record lows last Thursday, while cautiously laying the groundwork for lowering them later in the year.
Sterling was slightly lower at $1.2844, after hitting its highest level since the end of July at $1.2890 on Friday, amid bets the Bank of England will be slower to reduce rates than the Fed or the ECB. The British currency will be tested on Tuesday with the release of employment and wages data.
MUFG’s Hardman said the key data points for currencies this week are the two prints of US inflation – Tuesday’s consumer price index and Thursday’s producer price index.
“If inflation surprises higher again in February, it will be harder to view it as just a bump in the road to slowing inflation, and it will further challenge market expectations for the Fed to begin to cut rates in June,” he said.
The Australian dollar was down 0.2% at $0.6613 after jumping 1.55% last week as the US dollar fell due to a slowdown in the jobs market.
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