JPY showing impressive gains vs. USD – Scotiabank

FXStreet Insights Team FXStreet

Japanese Yen (JPY) is entering Wednesday’s NA session with an impressive 0.4% gain vs. the US Dollar (USD), a mid-performer among the G10 in an environment of broad-based USD weakness, Scotiabank's Chief FX Strategist Shaun Osborne notes.

Spreads remain steady

"Market participants remain focused on Japan’s government bond market and the recent surge in yields, a consequence of the BoJ’s policy normalization and its scaling back of large-scale bond purchases."

"Policymakers at the BoJ have been speaking to market participants this week, in the context of Tuesday’s poor 20-year bond auction, as they are preparing to unveil further adjustments at next month’s policy decision in mid-June."

"Recent market turbulence is challenging the central bank’s plans for normalization. Trouble appears concentrated at the long end however, as we note the relative stability of US-Japan yield spreads at both the two-year and 10-year horizon."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD gains traction above 1.3400 as softer US CPI dampens Fed rate hike expectations

The GBP/USD pair gains ground to near 1.3405 during the early Asian session on Wednesday. The US dollar weakens against the British Pound as softer-than-expected US inflation in June tempered expectations for US Federal Reserve policy tightening. The release of the US June Producer Price Index report will be in the spotlight later in the day.

EUR/USD gathers strength above 1.1400 after soft US inflation data

The EUR/USD pair gains ground to near 1.1425 during the early Asian trading hours on Wednesday. The US Dollar weakens against the Euro as softer-than-expected US inflation data temporarily eased pressure on the Federal Reserve. Traders will take more cues from the US Producer Price Index report, which is due on Wednesday.

Gold returns to the red below $4,050 amid fresh US-Iran hostilities

Gold resumes the previous day's late pullback from $4,100 and falls back below $4,050 early Wednesday as escalating US-Iran tensions keep the geopolitical risk premium in play. However, reduced bets for a Fed rate hike keep the US Dollar on the back foot, which could cap the downside in the non-yielding bullion.

Ethereum climbs 7% amid declining inflation, weak retail and whale participation

Ethereum jumped more than 7% above $1,850 on Tuesday following a weaker-than-expected US Consumer Price Index report for June. The inflation data fell to 3.5% below expectations of 3.8%, marking a month-on-month decline of 0.4%, its largest monthly drop since May 2020. Core CPI also fell to 2.6% below forecasts of 2.8%.

Fed Chair Warsh reaffirms they will deliver price stability

While testifying on the Semiannual Monetary Policy Report before the US House Financial Services Committee, Fed Chairman Kevin Warsh reiterated that the Fed is making a commitment on price stability and the goal of 2% inflation.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.