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Musk: The Cybertruck is an amazing car. Its the best car weve ever made at Tesla (TSLA.O).December 4th - The dollar remained weak after hitting a five-week low in the previous session, as US data and news regarding the next Federal Reserve chair boosted expectations of a rate cut ahead of next weeks interest rate decision. On Wednesday, the ADP private sector employment report was weaker than expected, while ISM services data showed some easing price pressures. These data were released after Trump hinted that he would nominate Hassett as the next Fed chair. LSEG data showed the market was pricing in an 85% probability of a Fed rate cut in December.December 4th - Turkey is seeking to invest in the US oil and gas sector while accelerating a comprehensive overhaul of its energy portfolio, which has so far been largely built around US liquefied natural gas (LNG). Turkish Energy Minister Alparslan Bayraktar stated that Turkish Petroleum (TPP) is in talks with Chevron, ExxonMobil, and other major US companies to secure positions in upstream assets as part of Turkeys plan to expand its growing LNG exposure. He said an announcement could be made as early as next month. This plan adds a new dimension to Turkeys expanding relationship with the US, which has become Ankaras primary long-term gas supplier. Turkey is seeking to secure access to this critical fuel to support its energy-hungry $1.4 trillion economy and to diversify its sources, reducing its dependence on Russia and Azerbaijan.December 4th - U.S. Treasury yields rose in Asian trading, reversing Wednesdays losses, but remained within their recent range. Initial jobless claims data will be released this afternoon, a potentially important input ahead of the Federal Reserves December interest rate decision. According to LSEG data, the money market continues to bet on a rate cut, pricing in an 85% probability of a 25 basis point cut. Wednesdays weak ADP private sector employment data showed an unexpected decline in November jobs. According to Tradeweb data, the two-year Treasury yield rose 1.8 basis points to 3.503%, and the 10-year Treasury yield rose 2.5 basis points to 4.082%.December 4th - According to David Zahn, head of European fixed income at Franklin Templeton, the UK government will struggle to secure spending funds, which will help push the 30-year gilt yield to 6% within the next year. While Chancellor Reeves successfully increased the countrys fiscal buffer in last weeks budget, she relied on a series of tax increases that wont take effect for several years. He believes these measures will be implemented close to the next general election, expected in 2029. Zahn said, "Its very unusual for any government to significantly increase taxes so close to the election." Zahn has been predicting higher UK gilt yields since April. He sold all his bond positions in March, stating that the market is most vulnerable to any increase in spending given the UKs dire fiscal situation. His contrarian prediction of a 6% yield on the 30-year gilt has not yet materialized. The yield briefly rose to 5.75% in early September but had fallen back to 5.2% by Wednesdays close.

The USD/JPY exchange rate reaches 133.50 as the BOJ's summary of viewpoints bolsters the outlook for loose policy

Alina Haynes

Dec 28, 2022 10:59

USD:JPY.png 

 

After fluctuating around 133.50 during the Asian session, the USD/JPY pair has breached to the upside. The Japanese Yen is volatile due to expectations that the Bank of Japan (BOJ) will retain its ultra-lax monetary policy.

 

The USD Index has maintained a range-bound performance near 103.80 despite the volatility of risk-sensitive assets. The selling pressure on the S&P 500 on Tuesday was caused by weakness in technology companies. In addition, a decline in economic activity, as recorded by the Trade Balance figures of the United States Census Bureau, caused uncertainty to US markets.

 

In November, the US international interest rate gap dropped by $15.5 billion, from $98.8 billion in October to $83.3 billion. The drop in the trade deficit is not attributable to a rise in exports, but rather to a general decline in economic activity. The United States economy has begun to feel the effects of the Federal Reserve's (Fed) decision to boost interest rates to combat inflation.

 

In the interim, the decline in US Durable Goods Orders and household consumption spending has begun to raise red flags regarding the Federal Reserve's aggressive monetary policy. The economists at ING anticipate that the recession will hasten inflation's reduction, allowing the Fed to reduce interest rates by the end of CY2023.

 

Reuters shared the Bank of Japan (BOJ) Summary of Opinions for the most recent monetary policy meeting, which underlined that the central bank must sustain its easy monetary policy because Japan is in a vital phase for achieving its price target. In addition, the economy is exhibiting signs of wage increases, which is a positive economic cycle; yet, it is prudent to maintain a loose monetary policy for the time being.


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