Market awaits Kazuo Ueda comments in front of Japanese parliament • US yields fall ahead of Federal Reserve minutes
The Japanese yen rose in the Asian market on Wednesday against a basket of major and minor currencies, extending its gains for the fourth consecutive day against the US dollar, hitting a two-week high, benefiting from the continued sell-off of the US currency, with remarkable activity in purchases of the Japanese currency, ahead of comments by Japan Bank Governor Kazuo Oeda before the Japanese parliament.
US bond yields continue to fall ahead of the release of the minutes of the Federal Reserve’s latest monetary policy meeting, which is expected to include strong evidence about the federal interest rate cuts this year.Price outlook • Japanese yen exchange rate today: The dollar fell against the yen by about 0.25% to (144.93 ¥) the lowest since August 7, from the opening price of trading today at (145.25 ¥), and recorded the highest level at (145.59 ¥).
• The Japanese yen ended Tuesday’s trading up 0.9% against the dollar, in the third consecutive daily gain, thanks to the decline in US yields.
Traders will be watching closely as a special session of the Japanese parliament on Friday to discuss the Japan Bank’s unexpected decision to raise interest rates last month and the central bank’s abrupt shift.
Bank of Japan Governor Kazuo Oeda will speak about the latest decisions, and investors will focus on his tone after his influential vice president, Shinichi Uchida, adopted a more dovish stance earlier this month, helping calm markets and easing pressure on the dismantling of curry yen deals.
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US Bond YieldThe yield on 10-year US Treasury bonds fell on Wednesday by 0.3 percentage points, deepening its losses for the fourth consecutive session, hitting a two-week low of 3.797%, which reduces investment opportunities in the US dollar.
This development in the US bond market comes as the Federal Reserve comes very close to launching a new monetary easing cycle in the United States and cutting interest rates next September.
In order to get more clues about this possible move, markets await later in the day the release of the minutes of the Federal Reserve’s last monetary policy meeting, which was held on July 30-31.
According to CME Group’s FeedWatch: pricing the odds of a 50 basis point cut in US interest rates at the September meeting are currently stable at 33%, and the pricing of the odds of a cut by about 25 basis points at 67%.
The shrinking gap on long-term bond yields between Japan and the United States, makes Japan yields of the currency an investment target for short buyers and deal financing, which is in favor of the appreciation of the Japanese yen.Expectations about the performance of the Japanese yen•We expect here at FX News Today that the yen will continue to move in positive territory against the US dollar, especially if the Federal Reserve minutes include less aggressive comments that enhance the prospects of a US interest rate cut by about 50 basis points.
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