12th August 2024 – (Tokyo) The yen fell against the dollar on Monday in calmer currency market trading after volatile moves last week, as investors weighed the prospects of deep Federal Reserve interest rate cuts next month ahead of a slew of U.S. economic data.
The respite follows a tumultuous week that began with a massive sell-off across currencies and stock markets, driven by worries over the U.S. economy and the Bank of Japan’s hawkishness. Last week ended on a calmer note, with Thursday’s stronger-than-expected U.S. jobs data leading markets to pare bets for Fed rate cuts this year.
“The U.S. equities have recovered rather nicely from their big profit sell-off, and that’s probably giving the dollar a little bit of boost because equities are doing better, and the economy is not so bad,” said Joseph Trevisani, senior analyst at FXStreet.com in New York. “We are back to a sensible view of the economy.”
Still, investors are pricing in 100 basis points of Fed cuts by year-end, according to the CME Group’s FedWatch tool, and U.S. producer and consumer prices numbers due this week could shift market perceptions.
“There’s a lot of data coming out around the world that is going to have some bearing on monetary policy decisions,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
The dollar was trading at 147.74 yen, up 0.8 per cent, and was also up nearly 0.5 per cent on the Swiss franc, at 0.8692. The euro edged up 0.04 per cent to $1.0918, while the dollar index was slightly up at 103.29. Sterling remained flat at $1.2762.
A week ago, the euro rose as far as $1.1009 for the first time since January 2023, as carry trades involving the yen unravelled and fueled a sharp rally in the Japanese currency. Leveraged funds’ net short position on the yen shrank to the smallest since February 2023 in the latest week, data showed.
“Carry trades have erased year-to-date gains; we estimate 65-75 per cent of positioning being unwound,” J.P. Morgan analysts said in a note on Saturday.
The post Yen stabilises against dollar as markets weigh Fed rate outlook appeared first on Dimsum Daily.
English (US) ·