Yen slightly appreciates in the upper 151 yen range, reflecting Bank of Japan report and lower US interest rates – Waiting for US CPI – Bloomberg

2024-04-09 22:39:00

The yen exchange rate in the Tokyo foreign exchange market on the 10th was in the high 151 yen to dollar range, slightly higher than the previous evening. Overseas time, it was reported that the Bank of Japan may be revising its price outlook upward, and the yen rose slightly due to a decline in US bond yields ahead of the release of the consumer price index (CPI). Today, the focus will be on position adjustments ahead of the US CPI, but on the other hand, the yen is likely to continue to be supported by concerns about intervention ahead of the 152 yen milestone.

  • As of 8:43 a.m., the yen was trading at 151.78 yen against the dollar (151.90 yen as of 5 p.m. on the 9th)
    • The price hit a low of 151.93 yen on the 9th and rose to 151.57 yen at one point.

Keiichi Iguchi, senior strategist at Resona Holdings’ market planning department, said that today’s market focus was on the US CPI, and that it was difficult to get a sense of direction by Tokyo time, making it “difficult to move independently.”

With US inflation slowing down since the beginning of the year, the US CPI is important in predicting whether the US Federal Open Market Committee (FOMC) will cut interest rates in June. The market is expecting a slight deceleration in the month-on-month growth rate.

Iguchi said that it is important to see how the outlook for US monetary policy changes in response to the CPI. “If the rate exceeds expectations and it becomes difficult to cut interest rates in June, there is a possibility that US interest rates will rise further and the dollar will appreciate.” prediction. In the interest rate swap market, the probability of a rate cut by the June FOMC meeting is around 60%, and the number of rate cuts this year is expected to be around 2.6.

Regarding the yen market, it has fallen to 152 yen for the first time in about 34 years, and there is a risk that the yen’s depreciation will accelerate. It’s hard to imagine the price movements.”

In response to reports that the Bank of Japan is likely to discuss upward revisions to its fiscal 2024 price outlook at this month’s monetary policy meeting, the interest rate swap market has priced in a policy rate slightly above 0.25% at the end of the year. As of the 8th, it was slightly below 0.25%.

Domestically, the domestic corporate goods price index for March has been released, and growth is expected to accelerate from the previous month. Additionally, Bank of Japan Governor Kazuo Ueda will deliver a semi-annual report to the House of Representatives in the morning. Iguchi pointed out that Governor Ueda’s half-yearly report was the second day following the report in the House of Councilors, and there had been a lackluster response the day before, so it was difficult to see it as material. On the other hand, if Governor Ueda’s statements and the domestic corporate goods price index are weak, there is a risk that uncertainty about interest rate hikes by the end of this year will increase.

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