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Warner Bros. Discovery (WBD.O) plans to reject Paramounts acquisition offer next week. December 31st - According to the minutes released Tuesday, some Federal Reserve officials expressed reluctance to support further policy easing in the near term when the Fed decided to cut interest rates at its meeting this month, suggesting that further rate cuts may face resistance at its next meeting in January. The minutes showed that the decision to cut rates became increasingly difficult as inflation persisted longer than the Fed had anticipated. Since the December meeting, more economic data has been released, showing that strong consumer spending has helped drive robust economic growth, despite a slight increase in the unemployment rate. New data scheduled for release next month may reshape the thinking of Fed officials ahead of their rate meeting in late January.On December 31st, Fxstreet analyst Joshua Gibson pointed out that the Federal Reserve released the minutes of its final interest rate decision of the year, confirming that FOMC members were willing to consider further rate cuts. However, the minutes did not reveal much other significant information. The Feds stance is tilting towards a dovish position, with most policymakers willing to explore the possibility of further rate cuts. However, the Feds policy adjustments still depend on weak inflation data, rather than a lack of inflation data.On December 31st, the Federal Reserve meeting minutes, in its staff economic outlook, noted that overall, real GDP growth is expected to accelerate slightly through 2028 compared to the projections prepared for the October meeting. This primarily reflects the anticipated greater support from financial market conditions and stronger expectations for potential output growth. After 2025, as the negative impact of high tariffs diminishes and fiscal policy and financial market conditions continue to support spending, GDP growth is expected to remain above potential growth through 2028. Consequently, the unemployment rate is expected to gradually decline after this year, reaching a level slightly below the staffs estimated natural rate of unemployment in 2027. Overall, staffs inflation projections for 2025 and 2026 are slightly lower than those presented at the October meeting, but their projections for 2027 and 2028 remain similar to previous projections.On December 31st, the Federal Reserve meeting minutes revealed that participants generally expected economic growth to accelerate in 2026, and that economic activity to expand at roughly the same pace as potential output over the medium term. Many participants anticipated that adjustments to fiscal and regulatory policies, or more favorable financial market conditions, would support economic growth. However, participants believed that uncertainty regarding their forecasts for real GDP growth remained high. Furthermore, some participants noted that structural factors such as technological progress and productivity gains (potentially reflecting increased applications of artificial intelligence) could promote economic growth without creating price pressures, but could also dampen job growth.

On the back of dismal BOJ Minutes and falling yields ahead of US data, the USD/JPY falls toward 136.00

Alina Haynes

Jul 26, 2022 11:55

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The USD/JPY pair is retesting its intraday low at 136.30 in Tokyo during the first hour of trading on Tuesday. As a result, the yen pair reverses the corrective loss from the previous day in reaction to falling US Treasury rates and conflicting comments from the minutes of the Bank of Japan's (BOJ) Monetary Policy Meeting.

 

According to the minutes of their rate-setting meeting in June, Bank of Japan officials agreed that ultra-low interest rates must be maintained to support a fragile economy and ensure that rising inflation was supported by higher wages. According to the Minute statement, members agreed that the BOJ must support the economy, which is under pressure from rising commodity prices.

 

The fear of a recession has returned in other areas of the world despite US authorities' efforts to lessen it. Ben Harris, Assistant Secretary for Economic Policy, and Neil Mehrotra, Deputy Assistant Secretary for Macroeconomics, two representatives of the US Treasury, recently voiced hope for a stronger US gross domestic product (GDP). While GDP shrank in the first quarter, aggregate income, which includes wages, business earnings, rental and interest income, continued to rise at an annual pace of 1.8 percent. This is known as gross domestic income (GDI).

 

A second quarter GDP decline would not indicate a recession owing to the underlying strength of the labour market, demand, and other indicators of economic health, according to US Treasury Secretary Janet Yellen, who addressed concerns about a US recession earlier in the week.

 

The Dallas Fed Manufacturing Index for July fell to its lowest levels since mid-2020, posting -22.6 compared to -12.5 forecast and -17.7 previously, which is noteworthy given that the Chicago Fed National Activity Index printed -0.19 in June as opposed to the anticipated -0.03 figure.

 

In addition, Bloomberg's investigation shows that the absence of trade between Australia and China is causing the Chinese recession worries that are weighing on the economic slowdown in the major countries to also be driving down the USD/JPY exchange rate. According to Bloomberg, "China's economic slowdown is spreading to important exporting countries in Europe and East Asia through weakened demand for manufactured goods, forcing Germany and South Korea to declare unusual deficits with the second-largest economy."

 

Wall Street ended with a mixed showing, with the DJI30 and S&P 500 seeing relatively modest gains while the Nasdaq saw only small declines. The 10-year US Treasury rates, on the other hand, broke a three-day downward trend and rose by around 1.75 percent, returning to the 2.81 percent level recently. S&P 500 Futures saw a notable intraday loss of 0.37 percent as of publication.

 

The key indication for intraday change for pair traders appears to be the US CB Consumer Confidence for July, formerly 98.7. As the markets get ready for a 0.75 percent interest rate increase, the Federal Open Market Committee (FOMC) meeting on Wednesday will be crucial.


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