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All eyes are on the approaching Fed, the yen continues to slide

FILE PHOTO: Currency symbols of the Japanese yen, euro and US dollar are seen on a board outside a currency exchange office at Narita International Airport
FILE PHOTO: Currency symbols of the Japanese yen, euro and U.S. dollar are seen on a board outside a currency exchange office at Narita International Airport near Tokyo, Japan March 25, 2016. REUTERS/Yuya Shino

March 15, 2022

By Alun John

HONG KONG (Reuters) – The yen remained under pressure on Tuesday and the Australian dollar was damaged by recent lockdowns in China following fresh COVID-19 outbreaks, but moves were more muted than in recent days as traders eyes turned up addressed this week’s Fed meeting.

The Federal Reserve is set to hike rates for the first time since the pandemic at its meeting ending Wednesday, with traders looking for clues as to the pace of future rate hikes.

According to the CME’s Fedwatch tool, markets are expecting a 25 basis point hike at this session, but prices have risen to show a 70% chance of a larger 50 basis point hike at their next session in May on inflation concerns.

“We believe Powell’s statement and chairing of the post-meeting press conference will impact market prices for a 50 basis point gain in May and beyond, and that will impact the US dollar later today,” said Carol Kong, foreign exchange strategist at Commonwealth Bank of Australia.

The dollar index, which measures the greenback against six major peers, was at 99.108, not far from 99.415 hit a week ago, its highest since May 2020.

The yen was trading at 118.37 per dollar Tuesday morning after falling sharply in recent sessions as the contrast between rising interest rates in the United States and low rates in Japan is becoming clearer as the Fed begins to hike rates .

The return of risk sentiment in the markets, partly on hints of a negotiated end to the war in Ukraine, has also taken some of the safe haven support for the Japanese currency.

Russian and Ukrainian delegations held a fourth round of talks on Monday, but no new progress was announced. Talks were set to resume on Tuesday.

The Euro remained fairly stable at $1.0947.

Traders also watched the Chinese yuan, which slipped to a one-month low against the dollar on Monday and broke a key threshold, pressured by rising expectations of monetary easing and worries about the rapid spread of locally transmitted coronavirus cases Lockdowns led some cities.

The offshore yuan was weaker at 6.398 per dollar, although the People’s Bank of China defied market expectations by leaving interest rates unchanged on Tuesday.

The Australian dollar was pressured at $0.7190 after falling 1.5% on Monday, hurt by a halt to the rise in commodity prices that sent it higher earlier in the month.

Kon said the situation in China was also weighing on the Australian.

Sterling was also hit to $1.3005, while Bitcoin in the cryptocurrency world is down 1.7% to around $39,000

(Reporting by Alun John; Editing by Stephen Coates)

https://www.oann.com/all-eyes-on-approaching-fed-meet-yen-slips-further/?utm_source=rss&utm_medium=rss&utm_campaign=all-eyes-on-approaching-fed-meet-yen-slips-further All eyes are on the approaching Fed, the yen continues to slide

DUSTIN JONES

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