Wednesday, 11 October 2017

What’s next? – USDJPY 11.10.17

Posted by Valentine at 11:44 Labels:

USDJPY

The dollar/yen was stable as of 07:30 GMT on Wednesday, trading at 112.35 as the greenback continued under pressure on the back of fears the Trump administration will have a hard time passing its long-awaited tax reform in Congress later this year.

The US dollar index, which gauges the greenback against a basket of six major rivals, was trading at 93.03 by the time of this writing, 0.08 percent lower.

Bank of Japan Governor Haruhiko Kuroda said on Tuesday the regulator will keep its massive quantitative easing program running until inflation surpassed its 2 percent target.

He also noted inflation is expected to gradually increase towards its target. The BOJ bond purchasing program has been active for the last three years, but with little results indeed.

"Japan's economy is expected to continue expanding moderately in the future," Kuroda explained at a meeting of the central bank's regional branch managers.

The dollar continued to receive support from last week’s employment report. Despite the economy lost 33,000 jobs in September, average hourly earnings rose by 2.9 percent year over year, which is seen as signal for further inflation growth in the coming months.

Inflation, together with labor market conditions, represent the most important benchmarks for the Federal Reserve to evaluate the state of the economy. The annual inflation target is two percent.

According to Fed funds tracked by CME Group’s FedWatch program, investors are pricing in a 86.7 percent chance of a 25 basis points interest rate hike by December.

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