Yen Weakens to Over Two-Month Lows
The Japanese yen traded near the psychologically important 160-per-dollar threshold on Thursday after sliding for two straight sessions and falling to its weakest levels in more than two months. The decline was driven by broad dollar strength amid rising expectations of a faster pace of Federal Reserve rate hikes, following stronger-than-expected US inflation data and increasingly hawkish comments from Fed officials. Markets are currently pricing in approximately a 91% probability of a Fed rate increase next month, with further hikes in January and potentially April also being considered. Meanwhile, domestic data showed that Japan’s producer prices increased 7.1% year-on-year in October, exceeding market expectations of 6.5% and accelerating from September’s 6.8% gain. Those figures reinforce expectations of tighter monetary policy from the Bank of Japan, which is also widely expected to raise interest rates next month and continue its tightening cycle into next year.
The Japanese yen traded near the psychologically important 160-per-dollar threshold on Thursday after sliding for two straight sessions and falling to its weakest levels in more than two months. The decline was driven by broad dollar strength amid rising expectations of a faster pace of Federal Reserve rate hikes, following stronger-than-expected US inflation data and increasingly hawkish comments from Fed officials. Markets are currently pricing in approximately a 91% probability of a Fed rate increase next month, with further hikes in January and potentially April also being considered.
Meanwhile, domestic data showed that Japan’s producer prices increased 7.1% year-on-year in October, exceeding market expectations of 6.5% and accelerating from September’s 6.8% gain. Those figures reinforce expectations of tighter monetary policy from the Bank of Japan, which is also widely expected to raise interest rates next month and continue its tightening cycle into next year.