Yen Weakens, USD/JPY Holds Near 158
The Japanese yen (JPY) continued its weakening against the US dollar (USD) during the European session on Thursday (May 14), with USD/JPY holding near 158.00, its highest level in about two weeks. The pair remained solid as the dollar outperformed and market interest tended to maintain positions in USD-denominated assets.
The dollar's strengthening was also evident in the US dollar index (DXY), which rose 0.72% this week to 98.55. The dollar gained support from growing confidence that the Federal Reserve would not cut interest rates this year, fading expectations of policy easing that had previously emerged.
These tightening expectations for monetary policy strengthened after the latest US inflation data. The US CPI for April, released Tuesday, showed headline inflation rose to 3.8% year-on-year, the highest level in nearly three years. According to CME FedWatch, market participants assess the Fed's chance of maintaining interest rates at current levels with a 66.8% probability, while the scenario of at least one hike is also back in the equation.
From Japan, the Bank of Japan's Summary of Opinions for its April meeting, released Tuesday, indicated a "likely" rate hike starting at the next meeting, although the outlook for the Middle East remains uncertain. The market is also closely monitoring comments by US President Donald Trump following his meeting with Chinese President Xi Jinping. The next focus will be on the release of US April Retail Sales at 12:30 GMT, projected to grow 0.5% after previously rising 1.7%, for additional clues regarding the strength of consumption and the direction of interest rate expectations. (asd)
Source: Newsmaker.id
