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U.S. consumer prices fell for the first time in six years in June, and a key measure of underlying inflation remained essentially flat, easing pressure on the Federal Reserve to raise interest rates. According to data released Tuesday by the Bureau of Labor Statistics, the Consumer Price Index (CPI) fell 0.4% in May but rose 3.5% year-over-year. The core CPI, excluding food and energy, was unchanged in May but rose 2.6% year-over-year. The report indicated that the decline in gasoline prices in June provided some relief to consumers as the worst of the energy price shock triggered by the Iran war began to subside. Federal Reserve officials are likely to welcome the data ahead of their meeting at the end of the month; however, renewed tensions between the U.S. and Iran, leading to a rise in oil prices, could prolong the inflationary effects of the conflict. U.S. stock index futures rose and Treasury yields fell as investors reduced their bets on a July rate hike by the Fed. Data showed that core inflation was subdued, primarily due to falling prices for goods such as clothing and used cars. Motor vehicle insurance premiums also fell sharply.Following the release of the CPI data, both WTI and Brent crude oil prices remained relatively stable in the short term, trading at $79.76 per barrel and $85.5 per barrel, respectively.The yield on the two-year U.S. Treasury note fell 10 basis points to 4.18% on the day.Federal Reserve Chairman Warsh: Job growth is in line with labor force growth. The unemployment rate is low and has not changed much over the past year. Layoffs have been relatively few.Market pricing indicates that bets on a Fed rate hike this month have been lowered.

The AUD/JPY exchange rate fluctuates below 90.00 as investors await BoJ action

Alina Haynes

Jan 18, 2023 15:03

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In the early Asian session, the AUD/JPY currency pair is bouncing violently in a narrow range below the resistance level of 90.00. Before the Bank of Japan introduces its first monetary policy of CY2023, the risk barometer indicates a sideways auction (BoJ). The AUD/JPY exchange rate reflects the consolidation of the AUD/USD, indicating an uncertain risk profile.

 

Investors anticipate that the Bank of Japan (BoJ) will not alter its policy stance on Friday, as doing so would increase financial market risk and hinder efforts to boost inflation. Previously, the Bank of Japan (BoJ) announced that the central bank will review the negative side effects of the decade-long ultra-loose monetary policy, generating the impression that the central bank is eager to abandon the easy policy.

 

The experts at Standard Charted expect the Bank of Japan to hold both the policy balance rate and the 10-year yield goal at their present levels of -0.1% and 0%, respectively. The recent decision to expand the 10-year JGB band to +/-50 bps (from +/-25 bps) will be evaluated by policymakers at the December meeting.

 

The replacement of current Governor of the Bank of Japan Haruhiko Kuroda will be widely followed. The next BoJ governor nominee is anticipated to be presented to the Japanese parliament on February 10, Reuters reported on Tuesday. Amamiya, Nakaso, and Yamaguchi are regarded as leading C.banking candidates.

 

Thursday is the expected publication date for Australian employment statistics, which investors are monitoring. The Unemployment Rate is expected to remain constant at 3.4%, according to the majority of economists. Aside from this, the Australian economy must have added 22,500 new jobs to the labor market in December, a down from the prior rises of 64K.

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