By Wayne Cole
SYDNEY (Reuters) – The dollar edged higher against the yen on Monday after Japan’s top central banker flagged further policy tightening going forward but left open the question of timing, leaving markets with no indication It was not clear if there would be a move next month.
Bank of Japan Governor Kazuo Ueda reiterated that interest rates will continue to rise gradually if the economy develops in line with the central bank’s outlook.
However, he made no mention of whether there would be a December hike, saying the BOJ would need to focus on various risks, including to the US economy.
That left a 54% chance of a quarter-point rise in market prices at the next policy meeting on December 19, little changed from before the speech. Ueda will also hold a media conference from 0445 to 0515 GMT.
It was his first direct talk on monetary policy since Donald Trump won the U.S. presidential election on Nov. 5, prompting investors to wonder if he should be more specific about the prospect of a hike. will
The dollar rose 0.6 percent to 155.09 yen, off Friday’s low of 153.86, on the lack of clear guidance. It retreated late last week when Japanese Finance Minister Katsunobu Kato warned the market on Friday of possible intervention if the yen fell too much and too quickly.
That retreat helped keep the euro steady at $1.0543 at the time, although it was still uncomfortably close to the recent one-year trough of $1.0496.
The dollar was at 106.660 against a basket of currencies, having touched a one-year high of 107.07 on Friday. The index climbed 1.6% during the week, marking six weeks of gains in the past seven.
The rally has coincided with a wild swing in the yield on the 10-year Treasury, which has climbed 70 basis points since early October, up 5.4 percent.
Pricing US Exclusions
Jonas Goltermann, Deputy Chief Markets Economist at Capital Economics, said, “While stability appears to be a distant possibility in the near term, we have revised our forecasts for the dollar and now see a further 5% increase through the end of 2025. offering.”
“This is based primarily on the view that Trump will continue the basic tariff policies he proposed on the campaign trail and that the U.S. economy will continue to outperform its major peers.”
Markets are eager to hear who Trump will pick as Treasury secretary, with Kanter Fitzgerald CEO Howard Litnick and investor Scott Besant among the top contenders for the job.
Analysts generally assume that Trump’s tariff cuts, immigration cuts and debt-fueled tax cuts will boost inflation, limiting the scope for further rate cuts by the Federal Reserve. to do
Futures mean the Fed has a 60% chance of easing by a quarter point in December and cutting rates by just 77 basis points by the end of 2025, down from more than 100 a few weeks ago.
At least seven Fed officials are scheduled to speak this week and traders believe they will remain cautious on aggressive cuts.
A number of European central bankers are also speaking out this week and may look more dire given recent soft economic data and the threat of tariffs on EU trade.
The data calendar for the US is light this week, but the UK, Japan and Canada all have key inflation reports, while manufacturing surveys at the end of the week will provide an indication of how sentiment will play out after the US election. have been
