- Odds of third Japanese rate hike this year decline
- Higher US treasury yields weigh on yen
The yen fell in Asian trade on Thursday on track for the second daily loss against the dollar, hitting three-week lows after the Bank of Japan’s meeting minutes.
The minutes showed the members are divided over the need to continue hiking interest rates, which in turn hurt the odds of a third hike this year.
The Price
The USD/JPY pair rose 0.2% today to 145.04 yen per dollar, the highest since September 4, with a session-low at 144.44.
The yen closed down 0.1% on Wednesday against the dollar, the first loss in three days after US long-term treasury yields rebounded.
BOJ Meeting Minutes
The Bank of Japan’s July meeting minutes showed that policymakers are divided on the path forward.
The BOJ hiked interest rates by 15 basis points at the July meeting and maintained interest rates unchanged at the September meeting, at 0.25%, the highest since 2008.
The BOJ in September unanimously voted to hold interest rates unchanged in order to wait for more data to consider the need for further normalization of policies.
Japanese Rates
Traders still see little chance of a BOJ interest rate hike in October, while the odds of a December rate hike stood at 60%.
US Yields
US 10-year treasury yields rose 0.1% on Thursday, maintaining gains and about to scale multi-week highs, in turn boosting the dollar.
The developments came after strong US housing sales data for August, which reduced concerns about a US recession in the third quarter.
According to the Fedwatch tool, the odds of a 0.5% Fed interest rate cut in November fell from 60% to 58%, with the odds of a 0.25% rate cut standing at 42%.
Now investors await a batch of important US GDP and unemployment claims data later this week to gather more clues on the future of monetary policies.
The Energy Information Administration reported a drop of 4.5 million barrels in US crude stocks last week to a total of 413.0 million barrels, while analysts expected a drop of 1.3 million barrels.
Gasoline stocks fell by 1.5 million barrels to 220.1 million barrels, as distillate stocks fell by 2.2 million barrels to 122.9 million barrels.
US stock indices declined mildly on Wednesday but remained near record highs scaled yesterday.
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.
On trading, Dow Jones fell 260 points to 41950 points as of 16:44 GMT, while S&P 500 shed 0.2%, or 8 points to 5724, as NASDAQ bucked the trend with a 0.1% gain to 18,092.
- Sharp drop in US crude stocks
- Markets await EIA inventory data
Oil prices fell in American trade on Wednesday away from three-week highs on profit-taking, as investors assess whether new stimulus measures in China would boost fuel demand.
The losses are stymied by a large decline in US crude stocks last week according to initial data, with traders awaiting the official EIA report later today.
Prices
US crude fell 2.2% today to $69.89 a barrel, with a session-high at $71.69.
Brent fell 2.1% today to $73.56 a barrel, with a session-high at $75.32.
On Tuesday, US crude rose 1.2% to a three-week high at $72.36 a barrel, while Brent added 1.1% to $75.83 a barrel, the highest since September 3.
The surge came after the announcement of new monetary stimulus measures in China, while the dollar lost ground.
Chinese Stimulus
China’s central bank announced its boldest and widest stimulus package yet since 2020 to boost economic performance and achieve growth targets.
However, investors are still waiting for the government to intervene with a similar package of fiscal aid and stimulus to accompany the monetary stimulus.
US Stocks
Initial data showed US crude stocks fell 4.4 million barrels in the week ending September 20, passing estimates of a 1.1 million barrels drop.
According to the data, total stocks are now down to 420.4 million barrels, the lowest since the week ending May 27, 2022, in a positive sign for US demand.
Later today, official data from the EIA on crude stocks will be released, expected to show a drawdown of 1.3 million barrels.
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