- Better than expected Japanese servies prices data
- Increasing odds of a third Japanese interest rate hike
The yen rose in Asian trade on Wednesday against a basket of major rivals, moving in a positive zone against the dollar for the third straight session following bullish remarks from Bank of Japan Governor Kazuo Ueda.
The remarks, combined with strong Japanese services prices data, boosted the odds of a third BOJ rate hike this year.
The Price
The USD/JPY pair fell 0.25% today to 142.89 yen per dollar, with a session-high at 143.49.
The yen closed Tuesday up 0.25% against the dollar after US treasury yields dropped following weak data.
Ueda
Bank of Japan Governor Kazuo Ueda said that real interest rates in the country remain too low, which continue to stimulate the economy and increase inflation.
Ueda added that it’ll be suitable to raise interest rates again if inflation moved as expected towards 2%.
He noted that recent services prices data shows the impact of higher wages on inflation.
Services Prices
Earlier Tokyo data showed services prices rose 2.7% in August, above estimates of 2.6%, and the same as July.
Gold prices rose on Tuesday to the sixth record high this month as the dollar lost ground against most major rivals.
The gains came as the Federal Reserve officially commenced a new policy easing cycle with a surprising 0.5% interest rate cut last week to 5%.
The markets are expecting another similar Fed rate cut by the end of the year.
Lower interest rates boost liquidity in the markets and reduce borrowing costs for corporations, in turn supporting investments.
Otherwise, the dollar index fell 0.4% as of 19:05 GMT to 100.4, with a session-high at 101.05, and a low at 100.4.
Gold spot prices rose 1.1% as of 19:06 GMT to $2682.2 an ounce.
US stock indices rose on Tuesday mildly and marked yet another record high.
The gains came as the Federal Reserve officially commenced a new policy easing cycle with a surprising 0.5% interest rate cut last week to 5%.
The markets are expecting another similar Fed rate cut by the end of the year.
Lower interest rates boost liquidity in the markets and reduce borrowing costs for corporations, in turn supporting investments.
On trading, Dow Jones rose 0.2% as of 15:28 GMT to 42226, while S&P 500 rose 0.1%, or 5721, as NASDAQ added 0.1% to 17,997.
- Bearish remarks from some Fed officials
- Rising odds of a 0.5% interest rate cut
Bitcoin rose on Tuesday and resumed its gains after a short hiatus yesterday, and about to scale five-week highs on US interest rate prospects.
Earlier cautious remarks from some Fed officials bolstered the case of a 0.5% interest rate cut in November as investors await more data.
The Price
Bitcoin rose 0.9% at Bitstamp today to $63,929, with a session-low at $62,720.
On Monday, bitcoin lost 0.4%, the first loss in seven days, after hitting five-week highs at $64,730.
Crypto Market Value
The market value of cryptocurrencies rose by over $15 billion on Tuesday to a total of $2.344 trillion as both bitcoin and ethereum gained ground.
Fed policymakers said in earlier remarks that the 0.5% rate cut last week was aimed at maintaining a growing and healthy economic balance.
Chicago Fed President Austin Goolsbey said there will be “a lot of rate cuts” in the next 12 months, while Minneapolis Fed President Neil Kashkari said the actual path forward for interest rates will depend on data.
US Rates
Following the remarks, and according to the Fedwatch tool, the odds of a 0.5% Fed interest rate cut in November rose to 51%, while the odds of a 0.25% slipped to 49%.
Lower US interest rates usually boost investments in high risk assets such as cryptocurrencies.
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