SINGAPORE, Dec 12 (Reuters) - The yen nursed losses on
Tuesday as traders walked back expectations for a Japan rate
hike, while the dollar was waiting on U.S. inflation data and a
slew of central bank meetings.
The dollar rose about 0.9% on the yen overnight.
At 145.96 yen it is about 3% above a low touched last week after
remarks on the challenging outlook from Bank of Japan Governor
Kazuo Ueda were taken as a hint that a policy shift was
imminent.
Bloomberg reported on Monday, citing sources, that BOJ
officials see little need to rush out of negative rates,
triggering a reversal of the yen's rally and gains in Japan's
stock and government bond markets.
"Wages growth is still weak," Commonwealth Bank of Australia
analyst Kristina Clifton pointed out in a note.
"We do not expect the BOJ to end negative interest rates
until Q2 24 at the earliest ... The wide differential between
U.S. and Japanese 10-year government bond yields can continue to
support dollar/yen."
Other currency pairs were broadly steady with the euro
at $1.0765 as the market focus turns on U.S. inflation
data, due at 1330 GMT, and beyond it to Wednesday's Federal
Reserve policy decision.
Sterling held at $1.2555. The Australian dollar
, floated four decades ago on Tuesday, was kept to
$0.6564 and the New Zealand dollar to $0.6122.
The dollar has been sliding since October's benign U.S.
inflation report but found a footing on upbeat jobs data
published on Friday. The Fed is considered certain to hold rates
at 5.25%-5.50% this week, putting the focus on the so-called dot
plots for rates and Chair Jerome Powell's press conference.
Expectations for a March cut have ebbed, though May
is seen as a better-than 3/4 chance.
Economists polled by Reuters expect headline inflation to
have been flat for November, and core inflation to keep steady
at an annual pace of 4% - well above the Fed's 2% target.
"Overly exuberant 'pivot zealots' may be set up for stumbles
over the markets-Fed expectations gap," said Mizuho economist
Vishnu Varathan.
"Of particular interest will be where the median rate
forecast for 2024 lands," he said in a note.
"Markets are banking on more emphatic cuts of (about) 100bp
whereas the Fed may be more stoic with more measured
reductions."
The European Central Bank, Bank of England, Norges Bank and
the Swiss National Bank then all meet on Thursday, with Norway
the only one considered a possible hiker. There is also a risk
the SNB dial back its support for the franc in FX markets.
The franc made an almost nine-year high on the euro
last week and traded a little softer than that at
0.9455 francs to the common currency on Tuesday.
========================================================
Currency bid prices at 0049 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar
$1.0766 $1.0765 +0.01% +0.48% +1.0766 +1.0764
Dollar/Yen
145.7650 146.1950 -0.27% +0.00% +146.1600 +145.7350
Euro/Yen 156.94 157.31 -0.24% +0.00% +157.3400 +156.8800
Dollar/Swiss
0.8779 0.8787 -0.08% +0.00% +0.8785 +0.8780
Sterling/Dollar
1.2562 1.2555 +0.00% +3.82% +1.2562 +1.2555
Dollar/Canadian
1.3571 1.3574 -0.01% +0.00% +1.3579 +1.3572
Aussie/Dollar
0.6570 0.6568 +0.04% -3.62% +0.6570 +0.6564
NZ
Dollar/Dollar 0.6125 0.6124 +0.02% -3.54% +0.6126 +0.6120
All spots
Tokyo spots
Europe spots
Volatilities
Tokyo Forex market info from BOJ
(Reporting by Tom Westbrook; Editing by Sonali Paul)
Yen hands back gains, dollar waits on CPI
December 11, 2023 at 08:06 pm EST
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