- USD/JPY is looking to extend gains above 132.00 ahead of US Inflation.
- Airborne threats to the US and anxiety ahead of US Inflation have spooked market sentiment.
- The Japanese Yen surrendered its entire gains after Kazuo Ueda cited the current policy as appropriate.
The USD/JPY pair is hovering near its day high around 132.00 in the Tokyo session. The asset is expected to refresh a four-day high above 132.00 as investors are extremely risk-averse ahead of the United States inflation report and airborne threats near the territory of the United States.
Losses by S&P500 futures have escalated further as investors are concerned that a surprise rise in the US inflation will strengthen the case of another interest rate hike by the Federal Reserve (Fed). Also, disappointing earnings by the US equities have weakened the risk appetite of the market participants. The solidifying case for more interest rate hikes by the Fed has pushed the 10-year US Treasury yields to nearly 3.75%.
The US Dollar Index (DXY) has refreshed its three-day high at 103.47 amid the risk aversion theme. Economists at MUFG expect the US Dollar to be underpinned by a strong inflation report. The rationale behind an improvement in the appeal for the US Dollar is the rise in used car prices at the start of this year. Bloomberg reported that average used-vehicle prices rose 2.5% in January according to data from Manheim.
Meanwhile, the Japanese Yen has surrendered its entire gains recorded after Nikkei Asian Review reported that the Japanese Cabinet is set to appoint academician Kazuo Ueda as the next Bank of Japan (BoJ) Governor after Haruhiko Kuroda steps down in April. Kazuo Ueda stated that the current monetary policy is appropriate, which led to a sell-off in the Japanese Yen as the Japanese government has been reiterating that the economy will consider an exit from ultra-dovish monetary policy.
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