- Markets await remarks by Bank of Japan Governor
- US treasury yields dip after Fed’s minutes
The yen rose in Asian trade against a basket of major rivals, about to hit two-week highs against the dollar amid sideways trading, with investors shunning big positions until Kazuo Ueda’s testimony ahead of the National Diet.
On the other hand, US treasury yields continued their decline following the Federal Reserve’s latest meeting minutes, which bolstered the case for starting the policy easing cycle in September.
The Price
The USD/JPY fell 0.3% today to 144.85, with a session-high at 145.64.
The yen closed flat on Wednesday against the dollar, after marking two-week highs at 144.45.
Kazuo Ueda’s testimony
Bank of Japan Governor Ueda will testify ahead of Parliament later on Friday to discuss the unexpected decision to raise interest rates last month, and the sudden turn to normalizing policies.
US Yields
US 10-year treasury yields dipped 0.1% on Thursday, extending gains for the fifth straight session and approaching two-week lows at 3.763%, hurting the dollar’s standing.
The decline came after the release of the Federal Reserve’s meeting minutes, which showed that members are leaning strongly towards a rate cut in September, with some even willing to cut rates in July.
According to the Fedwatch tool, the odds of a 0.5% Fed interest rate cut in September stood at 35%, and the odds of a 0.25% cut stood at 65%.
The Federal Reserve released the minutes of its July 30-31 meeting, at which it held interest rates unchanged below 5.5%, however it noted that recent progress in containing inflation, and the increase in unemployment, are enough reasons to take a decision of a 0.25% rate cut, potentially in September.
The minutes showed the members’ varying opinions between June and July, while adding just a phrase that says inflation has receded last year, but remains high somewhat.
They noted recent progress in battling inflation, while removing the word “modest’ in describing inflation control.
The Fed nonetheless dropped the word “very” from its “the Committee will remain very vigilant to inflation risks”, which indicates less concerns.
The minutes clearly show the Fed is now focused on stabilizing inflation, with full employment, instead of just inflation.
US stock indices rose on Wednesday as investors await more signals about the Fed’s policies.
Later today, the Federal Reserve will release the minutes of its July policy meeting, at which it held interest rates unchanged.
Now investors hope they’ll find clues that confirm expectations of a September rate cut, and especially the size of it.
Otherwise, earlier US labor data showed actual jobs growth was less by 30%, or 818,000, than monthly payrolls data indicated in the 12 months ending March 2024.
On trading, Dow Jones stabilized at 39,825 as of 16:49 GMT, while S&P 500 rose 0.1%, or 9 points to 5606, as NASDAQ added 0.2%, or 34 points to 17,845.
- Dollar’s stall pressures gold prices
- Markets await clues about US rate cuts
Gold prices fell in European trade on Wednesday away from record highs on profit-taking, while the dollar regained its ground against major rivals.
Now markets await the Federal Reserve’s latest meeting minutes to get a clearer picture on the future of US rate cuts.
Prices
Gold prices fell 0.35% today to $2505 an ounce, with a session-high at $2519.
On Tuesday, prices rose 0.4%, the third profit in four days, hitting record highs at $2531 an ounce.
The Dollar
The dollar index rose 0.2% on Wednesday, holding its ground above eight-month lows at 101.31 against a basket of major rivals.
The Fed is about to launch a new policy easing cycle in the US next month as inflation slows down and approaches targets.
US Rates
According to the Fedwatch tool, the odds of a 0.5% Fed rate cut in September stood at 33%, and at 67% for a 0.25% rate cut.
Fed’s Minutes
Later today, the Federal Reserve will release the minutes of the July 30-31 policy meeting, at which it held interest rates unchanged at below 5.5%.
The Fed said back then that progress in containing inflation has been achieved, with inflation approaching 2%.
Jerome Powell said the Fed is likely close to the point of taking the decision to cut interest rates, especially if inflation continues its decline.
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