The Japanese yen fell in Asian trade on Tuesday, on track for the third loss in a row against the dollar, while hovering near 2-⅕ month lows, and about to pierce 150 once more amid concerns about the Japan-US interest rate gap.

Bearish remarks from Japanese officials weakened the odds of a third interest rate hike this year, while conversely, the Federal Reserve is expected to continue cutting interest rates in the near term.

The Price

The USD/JPY rose 0.1% to 149.84, with a session-low at 149.44.

The yen lost 0.45% yesterday against the dollar, marking the second loss in a row, and plumbing 2-⅕ month lows at 149.98 as US 10-year treasury yields kept rising.

Japanese Rates

A series of bearish remarks by new Japanese PM Shigeru Ishiba and several BOJ officials reduced the odds of an October interest rate hike by the Bank of Japan, in turn hurting the yen’s standing.

US Rates

Federal Reserve official Christopher Waller called for more caution about cutting interest rates in the future, basing that on recent US data.

Following the remarks, the odds of a 0.25% Fed rate cut in November dipped slightly to 85%, while the odds of maintaining rates unchanged rose to 15%.

Interest Rate Gap 

The current Japan-US interest rate gap stands at 475 basis points, the lowest since early 2023, and will likely remain unchanged until the Federal Reserve’s November meeting.

Most cryptocurrencies rose on Monday as demand on riskier assets rebounded, pushing Wall Street to fresh record highs.

Markets are now focused on the corporate earnings season for the third quarter, which is starting shortly. 

The Federal Reserve’s latest meeting minutes showed divisions between members, with some supporting a smaller 0.25% rate cut instead of the eventual 0.5% cut. 

Fed officials expressed confidence that inflation is sustainably heading towards the 2% target. 

Most analysts now expect 0.25% interest rate cuts in both November and December, ending at between 4.25% and 4.5%.

Later this week, results from Bank of America, Goldman Sachs, Johnson & Johnson, Morgan Stanley, United Airlines, and Netflix will be released. 

Ethereum

On trading, ethereum rallied 7% as of 20:17 GMT on Coinmarketcap to $2625. 

Oil prices fell on Monday and extended the losses after OPEC reduced its outlook for global oil demand growth in 2024 and 2025. 

In its monthly report, the organization expects global demand on oil to average 104.14 million bpd in 2024, down from 104.24 million bpd in previous forecasts. It expected demand in 2025 to average 105.78 million bpd, down from 105.99 million bpd in previous forecasts.

Other government data from China showed oil imports at 45.5 million tonnes of crude oil, or 11.1 million bpd in September, down 7.4% m/m.

On trading, Brent futures due in December fell 2%, or $1.58 to $77.46 a barrel.

US crude futures due in November fell 2.3%, or $1.73 to $73.83 a barrel.

Bitcoin rallied over 3.5% on Monday to a two-week high in another attempt at piercing the $65000 barrier, amid hopes for improved demand in China, the world’s second largest crypto market.

Investors are now waiting for an important speech by the notable Fed official Christpher Waller, which might impact the pricing for future Fed rate cuts.

The Price 

Bitcoin rose 3.5% at Bitstamp today to $65,090, the highest since September 30, with a session-low at $62450.

On Sunday, bitcoin lost 0.55%, the first loss in three days. 

Crypto Market Value 

The market value of cryptocurrencies rose by $70 billion on Monday to a total of $2.358 trillion, the highest in two weeks as both bitcoin and ethereum rallied.

Chinese Stimulus 

Bitcoin rallied above $65000 on Monday on hopes for a new round of Chinese government stimulus, which could boost demand on crypto assets. 

China said on Saturday it’ll sharply increase government debt issuance to support low-income individuals and the real estate market and boost growth.

It’s hoped that the Chinese economy could experience a bounce before the year’s end, which might boost demand for bitcoin.

US Rates 

Investors reduced the odds of aggressive interest rate cuts by the Federal Reserve this year, following strong US labor data.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in November stood at 85%, while the odds of no changes stood at 15%.

As of 20:00 GMT, Fed official Christopher Waller is scheduled to speak at Stanford University, and will respond to audience questions.

Waller is known for his support for steeper interest rate cuts, with concerns that prices are slowing down faster than the Fed had expected.