Yen Rises Before Inflation Data, Aussie Pares Gains
The yen rallied to the highest since December on expectations Japan’s inflation data on Friday will support bets on further interest-rate hikes in the nation. Australia’s dollar failed to hold an intraday gain that followed a strong jobs print.
USD/JPY fell as much as 0.6% to 150.58, the lowest level since Dec. 9. Pair was sold by Japanese banks for their clients over the Tokyo fix, triggering further dollar liquidation, according to an Asia-based FX trader. Fast money funds are positioning for a strong Japanese CPI print on Friday, the trader said.
The Federal Reserve’s “rhetoric around potentially stopping QT is placing downward pressure on long-end UST yields and leading to a UST curve flattening,” said David Forrester, senior foreign exchange strategist at Credit Agricole CIB.
“These lower long-end yields and curve flattening are adding weight to USD/JPY. Japan inflation data on Friday will determine if we can get through the major technical support just below 150”.
AUD/USD fell 0.2% to 0.6332. It had risen as much as 0.2% after the jobs data. Option-related selling helped cap the Aussie’s advance while risk-off flows reversed it, according to an Asia-based FX trader.
Swaps traders reduced the chance of another two Reserve Bank of Australia rate cuts by year-end to roughly a 70% probability from about 81% prior to the jobs print, according to swaps data compiled by Bloomberg.
“Today’s data is impressive given the jobless rate held just as the participation rate grew and can only lengthen any pause the OCR might now be in,” Nick Twidale, chief analyst at AT Global Markets in Sydney said referring to the Australian employment data.
He expects Aussie gains to help insulate it against a further rise in the dollar and favors AUD/EUR into the weekend.
The Bloomberg Dollar Spot Index slipped 0.1% after closing up 0.2% for a second day.
10-year Treasury yields fell 1.5 basis points to 4.52%.
EUR/USD steady at 1.0423 after falling in the last three sessions.
GBP/USD little changed at 1.2583.
Source : Bloomberg
