USD/JPY declines to near 157.30 despite USD Index refreshes two-year high
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USD/JPY drops to near 157.30 even though the US Dollar posts a fresh two-year high. Traders pare Fed dovish bets on the back of upbeat US NFP data for December. Deepening risk-aversion sentiment has improved the JPY’s safe-haven appeal. The USD/JPY pair slumps to near 157.30 in Monday’s European session. The asset drops even though the US Dollar (USD) performs strongly, suggesting sheer strength in the Japanese Yen (JPY). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, refreshes a more-than-two-year high above 110.00. The Greenback strengthens as market experts have revised down expectations for the number of interest rate cuts this year. Analysts at Macquarie expect the Fed to cut borrowing rates only once this year, with the current interest rate cycle bottoming in the range of 4.00%-4.25%. On the contrary, Fed officials collectively anticipated two interest rate cuts this year in the latest dot plot. Market participants have dialed back Fed dovish bets after the release of Friday’s upbeat United States (US) Nonfarm Payrolls (NFP) data for December. The NFP report showed that labor demand remained robust, and unemployment decelerated unexpectedly. This week, investors will focus on the US Consumer Price Index (CPI) data for December, which will be published on Wednesday. Market participants will pay close attention to the inflation data as Fed policymakers have lately shown concerns over a slowdown in the progress of inflationary pressures declining toward the central bank’s target of 2%. Meanwhile, the safe-haven appeal of the Yen has strengthened amid global uncertainty. A sharp sell-off in equities globally has been observed amid risk-aversion mood with US President-elect Donald Trump returning to the White House on January 20. Also, growing expectations of more interest rate hikes from the Bank of Japan (BoJ) have strengthened the Japanese currency. Traders…
Filed under: News - @ January 13, 2025 12:22 pm