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The Hang Seng Index rose in the short term, and the Hang Seng Tech Index narrowed its losses to 0.5%.According to Investopedia, a financial website, forecasters predict that U.S. inflation may have risen to a 17-month high in September as tariffs push up prices. A Wall Street Journal survey of economists indicates that the CPI report, due this Friday, is likely to show a 3.1% annual increase in overall prices in December. Rising inflation would highlight the impact of Trumps tariffs, which have risen almost every month since the tariffs were announced in April. Despite rising prices, lower rent increases may prevent overall inflation from rising too much. Core inflation is expected to rise 3.1% in September, unchanged from August. Overall, the increase in inflation may not be large enough to prevent the Federal Reserve from cutting interest rates in late October. Having already cut rates by 25 basis points in September to support the sluggish job market, the Fed is now more focused on the job market than on combating inflation. Wells Fargo economists Sarah House and Nicole Cervi said, "We expect goods inflation to remain elevated due to the continued pass-through of tariffs, while easing primary housing costs should help mitigate services inflation."On October 23rd, Goldman Sachs economists said in a report that the Bank of Japan is likely to keep its policy rate unchanged next week from a risk management perspective amid high uncertainty. They said: "After assessing that uncertainty in its baseline outlook is high, the Bank of Japan is likely to judge that while downside risks to the economic outlook are substantial, upside risks to the price outlook are also substantial." They pointed out that the Bank of Japan is likely to maintain its stance of gradual rate hikes.The South Korean won fell to its lowest level against the dollar since mid-May.Indian state refiners are reviewing bills of lading for Russian oil cargoes arriving after Nov. 21 to ensure there are no direct supplies from Rosneft and Lukoil, which are subject to U.S. sanctions, sources said.

As investors await fresh cues from the US ISM PMI, the USD/JPY pair fails to surpass 131.00

Alina Haynes

Jan 03, 2023 15:26

As the USD/JPY pair strives to surpass the critical level of 131.00 in the early Tokyo session, it is facing increasing resistance. The asset is trading near its 12-day low, therefore investors are likely to maintain a state of apprehension.

 

Due to the market's need for sufficient time to settle after the holiday fervor and long weekend, the risk profile is still uncertain. As the U.S. equity market awaits the International Monetary Fund's economic estimates, S&P500 futures perform modestly (IMF).

 

On a CBS Sunday morning news broadcast, IMF Managing Director Kristalina Georgieva warned, "2023 will be a difficult year for the majority of the global economy, as the three engines of global expansion — the United States, Europe, and China – may all experience declining activity."

 

In the future, the sentiment of the market will be reflected in the trading volume of the US Dollar Index (DXY). The ISM Manufacturing PMI data from the United States will be the most crucial element on the USD Index. Predictions indicate that the US ISM Manufacturing PMI will increase to 49.6 from 49.0 in the most recent report. In addition, investors will monitor the New Orders Index, which provides insight into future demand in the United States. The economic data is projected to increase to 48.1, up from 47.2 in the previous release.

 

A continuation of Tokyo's ultra-lax monetary policy could have an impact on the Japanese Yen. The Bank of Japan (BOJ) has already established inflation targets close to 2% for fiscal years 2023 and 2024, necessitating further increases in pay rates and a steady flow of market liquidity to underpin aggregate demand.

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