Yen surges on Ueda’s remarks; dollar falls ahead of US inflation print

SINGAPORE, Sept 11 (Reuters) – The yen soared on Monday after comments by Bank of Japan Governor Kazuo Ueda raised hopes that Japan will soon usher in a new era in moving away from negative interest rates. But the dollar fell ahead of this week’s crucial US. Inflation reading.

Japan’s currency rose nearly 1% in Asian trade, boosted by Ueda’s comments over the weekend that the central bank could end its negative interest rate policy once it sees it reaching its 2% inflation target. , the dollar reached a trading high of 146.37 dollars.

Ueda said in an interview with the Yomiuri Shimbun that the Bank of Japan will have enough data to decide whether it can lift negative interest rates by the end of the year.

Since the US Federal Reserve began an aggressive rate hike cycle last year, the yen has been extremely weak against the dollar as a result of widening interest rate differentials with the US, with the Bank of Japan remaining a dovish outlier. is under great pressure.

“It seems that Mr. Ueda’s statement was intended to stop the yen’s depreciation against the dollar,” said Takehiko Masuzawa, head of trading at Philip Securities. “His comments function much like government intervention.”

Traders have been on the lookout for signs that Japan might intervene to boost the yen’s value since the yen weakened last month, with the exchange rate exceeding 145 yen to the dollar. This level a year ago prompted the authorities to intervene to buy the yen for the first time since 1998.

Elsewhere, the dollar fell broadly, moving away from last week’s three-month highs against the euro and sterling.

The euro, which ended an eight-week losing streak on Friday, was last up 0.21% at $1.0722. The pound rose 0.3% to $1.2503.

The dollar index last week capped an eight-week streak of gains, the longest since 2014, but fell 0.12% to 104.72.

U.S. inflation data for August is expected to be released on Wednesday, leaving traders wondering whether the world’s largest economy is really on a “soft landing” trajectory and whether the Fed will need to raise rates further. is paying attention to.

Christopher Wong, a currency strategist at OCBC, said the decline in the dollar was due to traders “lightening up” their long dollar positions ahead of the data release.

Last week, the U.S. dollar and U.S. Treasury yields soared as a series of solid economic data strengthened expectations that further rate hikes by the Federal Reserve were imminent.

“The global economy as a whole is not booming, but it’s not on the brink of recession either. The U.S. appears to be doing best among the major economies,” said Alvin Tan, head of Asian currency strategy at RBC Capital Markets. said.

The turning of the tide?

In Asia, the onshore yuan edged off Friday’s 16-year low of 7.3510 yuan to the dollar at 7.3188 yuan, while the offshore yuan was similarly weaker by more than 0.4%. It rose and was last bought at 7.3313 yuan to the dollar.

China’s consumer prices returned to positive territory in August, data showed over the weekend, as factory price declines slowed and deflationary pressures eased amid signs of economic stabilization.

The consumer price index (CPI) rose 0.1% year-on-year in August, slower than the 0.2% rise expected by the median estimate compiled by Reuters, while the producer price index (PPI) rose 3% year-on-year. It was almost the same as a 0% decline. With high expectations.

“Historically, China’s inflation rate hasn’t been negative for very long, at least not as much as a single published figure,” said Matt Simpson, senior market analyst at City Index. I was thinking that we might be able to get some more deflationary figures.”

The Australian dollar and New Zealand dollar were the biggest beneficiaries of the weaker US dollar, each gaining more than 0.5%.

The Australian dollar recently rose 0.6% to $0.64165, and the Kiwi rose 0.52% to $0.5914.

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