Yen under pressure after grim data
The Japanese yen fell in European trade on Monday against a basket of major rivals, extending the losses against the dollar for the third straight session and about to trade below 150 amid concerns about a Japanese GDP contraction following grim data.
Yen is also pressured by higher US 10-year treasury yields following the Federal Reserve’s policy meeting, at which it asserted it won’t rate rate cuts.
The Yen
The USD/JPY rose 0.4% to 149.95, with a session-low at 149.33.
The yen lost 0.35% on Friday against the dollar, the second loss in a row as Japanese inflation slows down.
The yen lost 0.45% last week against the dollar as the odds of a Japanese rate hike in May retreated.
Weak Data
Earlier Japanese data showed factory activities fell by the fastest pace in a year during March as production and new orders dropped in a worrisome sign for the economy.
Japan’s manufacturing PMI fell to 48.3 in March, a year low, from 49 in February, remaining below the 50 barrier which separates growth from contraction for the ninth straight month.
Japanese Rates
The odds of a Bank of Japan interest rate hike at the May meeting are now below 50%.
Bank of Japan Governor Kazuo Ueda said last week that there’s no specific predetermined schedule for rate hikes, with each decision dependent on new data and economic developments.
US Yields
US 10-year treasury yields rose 0.9% on Monday, offering more support to the dollar.
It comes as the Fed asserted it won’t rush into rate cuts and policy easing during its latest periodic meeting.
According to the Fedwatch tool, the odds of a May 0.25% Fed interest rate cut stood at just 12%.
Wall Street declines on track for weekly losses
US stock indices marked heavy losses on Friday while heading for a weekly decline amid renewed concerns about US inflation and recession.
The Fed decided to maintain interest rates at below 4.5%, but still expected two rate cuts this year.
The Fed raised its inflation forecasts this year and the next, while reducing its growth forecasts, triggering concerns about a potential recession.
On trading, Dow Jones fell 0.4%, or 140 points as of 15:11 GMT to 41,773 points, while S&P 500 fell 0.4% to 5637 points, as NASDAQ dropped 0.3% to 17,632 points.
Oil prices on track for biggest weekly drop since January
Oil prices fell in European trade for the first time in three days, moving away from two-week highs on profit-taking.
Despite the decline, oil prices are heading for the biggest weekly profit since January as the US intensified sanctions on Iran, and following OPEC’s new production plans.
Prices
US crude prices fell 0.9% to $67.72 a barrel, with March 3 highs at $68.61.
Brent fell 1.1% today to $71.56 a barrel, with March 3 highs at $72.46.
On Thursday, US crude rose 2%, while Brent added 2.1%, marking the biggest profit since January 15 on Chinese stimulus plans.
Weekly Trades
Oil prices are up 2.5% so far this week, on track for the second weekly profit in a row, and the largest since January.
US Sanctions
On Thursday, the US Treasury Department announced new sanctions on Iranian crude exports, including any shipping company that tries to transport Iranian oil.
It's the fourth round of US sanctions on Tehran since US President Trump’s vows last February to apply maximum pressure on Iran and destroy their oil exports.
Analysts expect Iranian crude exports to fall by a million bpd due to the new sanctions.
OPEC
The OPEC organization and their allies announced new measures to boost the market, including vows by seven members to cut production between 189 thousand bpd to 435 thousand bpd until June 2026.
Yen moves in negative zone as Japanese inflation slows down
The yen lost ground in European trade on Friday on track for the second loss in a row against the dollar, while also heading for the second weekly loss in a row after data showed inflation slowed down in Japan.
The data reduced inflationary pressures on Japanese policymakers and hurt the odds of a BOJ rate hike in May.
The Price
The USDJPY pair rose 0.6% today to 149.66, with a session low at 148.58.
The yen lost 0.1% yesterday against the dollar, resuming losses and approaching two-week lows at 150.14.
Weekly Trades
The yen is down 0.7% so far this week against thw dollar, on track for the second weekly loss in a row.
Core Inflation
Earlier Tokyo data showed core consumer prices rose 3.0% in February, down from 3.2% in January.
BOJ
The Bank of Japan maintained interest rates unchanged this week as expected at 0.5% , the highest since 2008.
Policymakers said they'd prefer more time to assess growing outside economic risks on Japan before hiking rates once more.
The BOJ believes the economy is recovering moderately with inflation progressing towards the 2% target, boosted by higher wages and consumption.
BOJ Governor Kazuo Ueda said the bank doesn't follow a fixed schedule to raise interest rates, with all future decisions dependent on data and economic developments.
The current odds of a BOJ rate hike in May is now standing at below 50%..