Yen extends losses as Banks of Japan holds off intervention
Yen fell in Asian trade on Friday against a basket of major rivals, extending losses for the second day in a row against the dollar and moving off ten-day highs, as Bank of Japan resumes buying bonds at a normal pace after slowing the pace earlier this week.
US 10-year treasury yields improved after cautious remarks by Fed officials on US inflation despite earlier data that showed a slowdown in US consumer prices in April.
The Price
The USD/JPY pair rose 0.35% to 155.93 yen, with a session-low at 155.30.
The pair lost 0.35% yesterday, after marking a ten-day high at 153.60.
Yen continued to lose ground as US treasury yields rallied, and after weak Japanese GDP data for the first quarter of the year.
The BOJ
The Bank of Japan maintained its normal process and pace of buying government bonds today after a surprise dip in purchases earlier this week.
Japan’s finance minister Shinuchi Suzuki said the government will work closely with the BOJ to maintain stability and guarantee that there are no conflicts between shared policies.
He asserted that the government is monitoring the forex market and interest rates closely.
The IMF
The International Monetary Fund said that Japan should allow the yen to move flexibly, which would help the BOJ to focus on stabilizing prices through monetary measures.
US Yields
US 10-year treasury yields rose by 0.7 basis points on Thursday away from a six-week trough at 4.313%, in turn underpinning the greenback.
The gains came after cautious remarks by several Fed officials, which hurt the odds of early Fed interest rate cuts in the summer.
New York Fed President John Williams said that a restrictive monetary policy is in a good position, and he believes there are no clear indicators now that would push for changing such policies.
Ethereum declines as markets process US inflation data
Most cryptocurrencies lost ground on Thursday as markets processed the latest US inflation data, which raised optimism about multiple Fed rate cuts this year.
Recent data showed US consumer prices rose 3.4% y/y in April, down from 3.5% in March.
On a monthly basis, consumer prices rose 0.3% in April, down from 0.4% in March.
Earlier data today showed unemployment claims fell by 10 thousand last week to 222 thousand.
Chicago Fed President Austan Goolsbey said he’s optimistic that inflation will continue to decline in upcoming months.
He reiterated Fed Chair Jerome Powell’s remarks earlier this week that it’s unlikely the Fed will have to raise interest rates once more.
According to the Fedwatch tool, there’s a 51.7% chance the Fed will cut interest rates at the September meeting.
Ethereum
On trading, ethereum fell 2.4% as of 21:04 GMT at coinmarketcap to $2946.5.
Dow Jones rallies above 40,000 points for first time in history
US stock indices opened Thursday higher on track for the third profit in a row, with major indices scaling fresh record highs.
Dow Jones rose above 40,000 points for the first time in history amid a strong risk appetite, with the odds of multiple Fed rate cuts this year improving.
US stocks are expected to sustain their momentum amid new cash inflows, while the Fed is likely to pump in more liquidity soon as monetary easing starts.
US Stocks
Dow Jones rose by 0.35% today to 40,051 points, a record high, with a session-low at 39,879.
The S&P 500 rose 0.29% to 5,325 points, a record highs as well.
Tech-heavy NASDAQ rose 0.43% today to a record high of 18,669.
Dow Jones rose 0.88% on Wednesday, while S&P 500 rallied 1.17% yesterday, as NASDAQ surged 1.9%.
US Consumer Prices
US consumer prices rose 3.4% y/y in April, down from 3.5% in March.
Core prices rose 3.6% y/y in April, down from 3.8% in March, marking the lowest rate since April 2021.
On a monthly basis, consumer prices rose 0.3% in April, down from 0.4% in March.
This a huge decline from the peak of 9.1% scaled in June 2022.
Fed Remarks
Chicago Fed President Austan Goolsbey said he’s optimistic that inflation will continue to decline in upcoming months.
He reiterated Fed Chair Jerome Powell’s remarks earlier this week that it’s unlikely the Fed will have to raise interest rates once more.
US Rates
Following the data and remarks, the odds of a Fed 0.25% interest rate cut in July rose to 35%, while the odds of such a cut in September rose to 75%.
According to the Fedwatch tool, investors expect two interest rate cuts by the Federal Reserve this year, likely in September and November.
Gold about to trade above $2400
Gold prices rose in European trade on Thursday, extending gains for the third straight session and almost trading above $2400 for the first time in four days as both the dollar and US treasury yields lose ground.
Recent US inflation data boosted the odds of multiple Federal Reserve rate cuts this year, in turn reducing inflation pressures.
Prices
Gold prices rose 0.5% today to $2397 an ounce, the highest since April 19, with a session-low at $2384.
Prices rose 1.2% on Wednesday, the second profit in a row, after strong US consumer prices data.
The Dollar
The dollar index fell 0.2% on Thursday, sharpening losses for the fourth straight session and hitting a five-week nadir at 104.08 against a basket of major rivals.
A weaker dollar makes greenback-denominated gold futures cheaper to holders of other currencies.
US Yields
US 10-year treasury yields fell by over 0.7 basis points on track for the fourth loss in a row, plumbing six-week lows at 4.313%.
The developments came after US consumer prices data were a bit below estimates, in turn boosting the case of a Fed interest rate cut in the summer.
US Inflation
US consumer prices rose 3.4% y/y in April, down from 3.5% in March.
Core prices rose 3.6% y/y in April, down from 3.8% in March, marking the lowest rate since April 2021.
On a monthly basis, consumer prices rose 0.3% in April, down from 0.4% in March.
This a huge decline from the peak of 9.1% scaled in June 2022.
Fed Remarks
Chicago Fed President Austan Goolsbey said he’s optimistic that inflation will continue to decline in upcoming months.
He reiterated Fed Chair Jerome Powell’s remarks earlier this week that it’s unlikely the Fed will have to raise interest rates once more.
US Rates
Following the data and remarks, the odds of a Fed 0.25% interest rate cut in July rose to 35%, while the odds of such a cut in September rose to 75%.
According to the Fedwatch tool, investors expect two interest rate cuts by the Federal Reserve this year, likely in September and November.
The SPDR
Gold holdings at the SPDR Gold Trust rose 1.43 tonnes yesterday to a total of 833.36 tonnes, the highest since April 24.