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June 21, Swiss National Bank President Schlegel said that lowering interest rates below zero is a bolder move than lowering them above that level, suggesting that the central bank may be hesitant to take such a step. "We realize that negative interest rates are a challenge for many stakeholders in the economy," Schlegel said. "Negative interest rates also have a negative impact on savers, bankers, pension funds, etc. We are very aware of this. If we lower interest rates to negative values, the obstacles will certainly be higher than normal interest rate cuts." When asked about the possibility of the Swiss National Bank cutting interest rates at its next decision on September 25, Schlegel was reluctant to make a commitment, saying that officials would weigh data and forecasts at that time. Two days ago, the Swiss National Bank cut interest rates to zero in an attempt to prevent investors from pushing up the Swiss franc.On June 21, local time, French President Emmanuel Macron posted on his personal social media that France and its European allies will speed up the negotiation process on the Iranian nuclear issue. Macron said that he had a telephone conversation with the Iranian president and expressed his deep concerns about Irans nuclear program. Macron said, "My position on this issue is very clear. Iran must not have nuclear weapons, and Iran should provide sufficient guarantees to prove that its nuclear program is indeed peaceful."The U.S. Senate is considering repealing a rule that would have boosted the growth of fuel-efficient cars.On June 21, the Saudi Nuclear and Radiation Regulatory Commission issued a warning on its social media on June 20 that any armed attack or threat against nuclear facilities used for peaceful purposes by any party would violate the principles of the UN Charter, international law and the Statute of the International Atomic Energy Agency. Since June 13, Israel has launched large-scale air strikes on many parts of Iran, bombing Iranian nuclear facilities, which has aroused great concern from the international community.The Israeli military says it is currently attacking military infrastructure in southwestern Iran.

USD/JPY continues Powell-led declines to fresh 14-week low, BOJ's Kuroda, and US PCE Inflation in the horizon

Daniel Rogers

Dec 01, 2022 15:22

截屏2022-12-01 上午10.12.17.png 

 

As Tokyo opens on Thursday, USD/JPY bears take advantage of the weakening US Dollar to mark the lowest level in more than three months near 137.30. In addition to falling US Treasury bond yields and a risk-on market mentality, the recent depreciation of the Yen could be attributed to a weaker yen.

 

Fed Chair Jerome Powell made his first public appearance since the November Federal Open Market Committee (FOMC) meeting by speaking at the Brookings Institution about the economic outlook, inflation, and employment. The official noted that it makes sense to reduce the rate of interest rate increases and speculated that this might occur as soon as the December meeting. Lisa D. Cook, a member of the Federal Reserve Board of Governors, praised the inflation figures as evidence that the Fed will likely take fewer steps in the future.

 

Following Powell's speech, market bets supporting a 50 basis point (bps) rate hike by the Federal Reserve in December increased from 69.9% prior to the speech to over 75%, resulting in a depreciation of the US Dollar and a rise in Treasury yields, while equities appreciated.

 

As a result, the US Dollar Index (DXY) shattered a three-day uptrend on Wednesday, exhibiting the steepest daily fall in a week and the largest monthly decline in 12 years. Notable is the fact that Wall Street benchmarks responded favourably to Fed Chair Yellen's dovish remarks, while 10-year Treasury bond yields reversed early gains to end November on a negative note near 3.61 percent.

 

In addition to Fedspeak, the poor US statistics and optimism on China's Covid situation also weighed on USD/JPY prices. Among these, the US ADP Employment Change received the most attention, as its November result of 127K constituted the lowest readings since January 2021, compared to the 200K expected and 239K previous results. In addition, China reported just over 38,000 daily cases of Coronavirus on Tuesday, which was reported on Wednesday, indicating the second consecutive day of declining virus levels after the record high was updated. The gradual easing of virus-driven activity restrictions in major cities such as Zhengzhou, Guangzhou, and Chongqing looked to have favored Yen pair sellers.

 

Moving forward, the Fed's favored inflation measure, namely the US Core Personal Consumption Expenditure (PCE) Price Index for October, which is forecasted to increase to 5.0% YoY in October from 5.1% in September, will be key for near-term USD/JPY fluctuations. The US ISM Manufacturing PMI for November will also be significant, with a predicted reading of 49.8 compared to 50.2 earlier. Recent rumors regarding the possible tightening of monetary policy by the Bank of Japan (BOJ) in 2023 are the focal point of Governor Haruhiko Kuroda's address today.


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