DollarUS dollar notes are photographed in Buenos Aires, on June 23, 2022. - Argentines do their accounts in dollars, traumatised by recurrent economic crises and tormented by the inflation that is eating away at their pockets and is projected to exceed 60% this year. (Photo by Luis ROBAYO / AFP) (Photo by LUIS ROBAYO/AFP via Getty Images)

Dollar Firm as US CPI Data Looms; Hawkish BOJ Policymakers Pause Yen Slide.

The dollar’s value, meanwhile, was unchanged yesterday, with the Fed’s next-week interest rate decision a focal point for traders. On the other hand, there was no earlier sign of the yen’s downfall, yet some support came from the hawkish remarks made by Bank of Japan (BOJ) members.

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The yen recently rose against the dollar, but it received a boost from the BOJ’s April summary, which showed predominantly hawkish wording. The summary thus revealed an overwhelming trend towards maintaining the current favorable conditions or even gradually inching them up.

Nevertheless, the yen’s short-term uptrend could not outweigh the negative sentiments around it, which led to the market being largely bearish from a yen viewpoint. Last week’s Federal Reserve meeting was mixed with the disappointing numbers of U.S. job growth, which caused the expectations of potential rate cuts in the U.S., which had a reminder of the persistently low yields of Japan.

While others predicted that the U.S. might take two rate hikes in 2018, the vast difference in yields between the U.S. and Japan is a major variable driving the dollar’s strength against the yen. However, worries continue to fester given the reports of Tokyo’s possible currency market intervention last week, wherein it spent about $60 billion to stem the yen’s fall, which slipped to a 34-year low point against the USD.

Masato Kanda, Japan’s Minister of Finance, reiterated Japan’s readiness to react and accommodate the currency market if necessary, thereby confirming that the Japanese yen exchange rate is also an issue. Consequently, the D/YN pair is expected to be inside the 155-160 zone, where traders will closely monitor any possible activities from the Japanese authorities.

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Image source: CNBC

RATE PATHS

Traders and investors will be tuned in to the next economic indicators, including the April U.S. PPI and CPI data scheduled for the beginning of next week. The Federal Reserve will analyze such crucial information to check whether it is moving towards a 2% target rate, which has implications for the Fed’s policy directions.

Charu Chanana pointed out that the C-mac report in Saxo is very important along these lines as it could either complement or negate the Fed’s narrative on inflation. A print that points to the fact that core inflation is below their target and may be disinflationary could undermine the Fed’s credibility.

Susan Collins, President of the Federal Reserve Bank of Boston, pointed out the need to slow down the U. S. economy so the economy can regain its rate of inflation at the target level.

The dollar index faring somehow no change at 105 was reflected again. 51.

The pound stays stable in the FOREX market, anticipating the Bank of England’s policy announcement later. 24975. The BOE is anticipated to be within a margin of its first interest rate cut in the last four years, during a time until the falling inflation rate. Investors will be watching to see whether the BOE is thinking of any possible rate cut as early as June, which might be prompted by the already expressed intention of the ECB to lessen borrowing costs.

The euro denied the dollar its dominance at the rate of $1. 0748.

China’s offshore yuan registration saw a slight boom to 7 level. The market reacted positively to the data from the National Bureau of Statistics of China, which indicated growth in April’s exports and imports despite a contraction in the previous session. This favorable economic situation may make rate cuts in China obsolete for those who think that the country needs such cuts to meet the expected GDP target set for 2024.

The cryptocurrency industry is exemplified by Bitcoin, which incurred a slight rise of 0. 09%, reaching $61,618. 12.

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