Yen Gains as Japan Leadership Race Fans BOJ Bets
The yen outperformed its Group-of-10 peers after Shinjiro Koizumi, who is seen as less likely to influence the Bank of Japan’s interest-rate path, joined the ruling party’s leadership race.
USD/JPY fell 0.2% to 147.04. Koizumi, who is currently Japan’s agriculture minister, will run in the ruling party leadership race as the Liberal Democratic Party looks for a successor capable of turning around its prospects and leading the nation.
The Bloomberg Dollar Spot Index fell as much as 0.2% to its lowest since July 24. With overnight-indexed swaps signaling a small probability of a 50-basis-point Fed rate cut this week, traders will await August retail sales and industrial production data due later Tuesday to gauge whether such expectations are justified.
“The yen gain appears to have been fueled by confirmation that Koizumi has thrown his hat in the ring for the LDP leadership,” said Rodrigo Catril, senior FX strategist at National Australia Bank. “This is good news for those hoping the BOJ will get on with its policy normalization goal sooner rather than later”.
reasury 10-year yields steady at 4.04% after falling three basis points on Monday.
“The flow-on effect from lower US Treasury yields and the increasing view that the Fed is behind the curve and needing to ramp up the urgency to take rates to neutral, has seen the US dollar trade lower,” Chris Weston, head of research at Pepperstone Group, wrote in a research note.
While rate pricing suggests it would be hard for the Fed to deliver a dovish surprise, FX traders aren’t reflecting a stronger-dollar bias, he added.
EUR/USD edged 0.1% higher to 1.1776
NZD/USD little changed at 0.5969. AUD/USD dipped 0.1% to 0.6664
AUD/NZD rose as much as 0.2% to 1.1191, the highest since October 2022
GBP/USD inched up 0.2% to 1.3619. Fx pair held gains following UK employment data.
Source : Bloomberg
