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September 17 – The 10th China-Australia (Australia) Defence Working Meeting was held in Beijing on September 17. The two sides exchanged candid and in-depth views on military relations, maritime and air security, and international and regional issues of common concern, enhancing mutual understanding and trust.On September 17th, when asked whether it was reasonable for the market to price in nearly four interest rate hikes within the next year, Bank of England Governor Bailey said on Thursday that the outlook was too unpredictable, adding that his officials had not yet discussed this. "Weve had a lot of discussions this time, but we havent discussed the prospect of four rate hikes," Bailey told the media after the Bank of England kept interest rates unchanged but warned of rising inflationary pressures. He added, "The market has to form its own judgment, but I must point out: the current situation... is simply too unpredictable." Bailey stated that the state of the UK gilt market—with the 30-year gilt yield hitting its highest level since 1998 this week—did not influence the banks announcement. Bailey said, "We planned this work long before the Middle East conflict, so this is not at all a reaction to market conditions."The U.S. pending home sales index fell 4.9% year-over-year in August, compared with a forecast of -3.9% and a previous reading of -2.50%.The U.S. pending home sales index rose 0.3% month-over-month in August, compared with expectations of -0.6% and a revised previous reading of -2.6% (from -2.30%).The U.S. pending home sales index for August was 71.2, revised from 71.2 in the previous month.

The USD/JPY pair rises to 137.40 on hawkish Fed Powell comments, BoJ policy, and US employment data

Alina Haynes

Mar 08, 2023 14:02

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The USD/JPY pair has risen to around 137.40 in the early Asian session, following an unusual upward move prompted by hawkish comments made by Federal Reserve (Fed) chair Jerome Powell in his congressional testimony.

 

After a sharp decline on Tuesday, S&P500 futures posted modest gains, which may be indicative of minor short coverings amid a bearish market sentiment. As the likelihood of a U.S. economic recession increased, the US Dollar Index (DXY) reached a three-month high above 105.60 on Tuesday.

 

In his testimony before Congress, Fed Chairman Powell disclosed a new strategy for combating inflation. As the current monetary policy is insufficient to achieve price stability, there will be an increase in interest rates in the future. According to Fed Chairman Powell's testimony, investors should anticipate a greater number of rate hikes than previously anticipated because economic indicators indicate that inflationary pressures are strong.

 

Investors should be aware that this was Powell's first comment on interest rates after observing resiliency in consumer spending and an optimistic labor market in January's economic data.

 

In the future, it will be of the utmost significance to release the US Automatic Data Processing (ADP) Employment Change (Feb) data. The economic data is expected to be 200K higher than the previous release of 106K.

 

Friday's release of Governor Haruhiko Kuroda's concluding monetary policy statement by the Bank of Japan (BoJ) is avidly anticipated by investors in Tokyo. As the economy focuses on increasing the labor cost index, it is highly probable that monetary policy will remain extremely lenient. The market responds in a variety of ways when yields on Japanese Government Bonds are modified (JGBs).


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