2025-10-30T16:42:38+00:00
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Shafaq News
The Japanese yen tumbled against the U.S. dollar on
Thursday after the Bank of Japan adopted a less hawkish tone than traders
expected, while the greenback was boosted after Federal Reserve Chair Jerome
Powell on Wednesday said a rate cut in December was not guaranteed.
The Bank of Japan kept interest rates steady and BOJ
Governor Kazuo Ueda sent the strongest signal yet that a rate hike was possible
as soon as December, depending on the outlook for wages next year.
However, “policymakers at Japan’s central bank
disappointed yen bulls by staying on hold and exhibiting the same degree of
dissent as in September,” said Karl Schamotta, chief market strategist at
Corpay in Toronto.
At a post-meeting press conference, Ueda also offered
little detail on when the central bank could next raise rates, heaping pressure
on the yen.
“Ueda took people by the back foot a little bit – that
he was so willing to wait it out,” said Lou Brien, strategist at DRW Trading in
Chicago.
The contrast with Fed communication added to the move
in dollar/yen.
Powell said on Wednesday that a policy divide within
the U.S. central bank and a lack of federal government data may put another
interest rate cut out of reach this year, as he acknowledged the threats that
officials see to the job market but also the risky nature of making further
rate moves without a fuller picture of the economy.
The Fed cut rates, as expected, with two dissents.
Governor Stephen Miran again called for a deeper reduction in borrowing costs,
while Kansas City Fed President Jeffrey Schmid favored no cut at all given
ongoing inflation.
“Powell communicated clumsily,” said Brien. “It was
maybe indicative that he lost a little control of the committee, or the
committee was just so disparate and he didn’t feel that he should force his
will on it.”
That said, “in my mind, they’re still going to cut in
December and that’s based on my idea that the labor market is weaker than it
appears,” Brien added.
Fed funds futures traders are now pricing in 71% odds
of a cut in December, down from around 85% before Powell’s comments.
The dollar index was last up 0.35% on the day at 99.49
and reached 99.72, the highest since August 1.
Against the Japanese yen , the dollar strengthened
0.98% to 154.21, the highest since February 13.
The euro remained lower on the day after the European
Central Bank kept interest rates unchanged at 2% for the third meeting in a row
on Thursday and offered no hints about future moves. It was last down 0.2% at
$1.1576 and reached $1.1546, the lowest since October 14.
“The European Central Bank’s steady-as-she-goes policy
approach looks as if it will remain intact for many months yet,” said
Schamotta.
“Rates are already plumbing the lower end of the
theoretical “neutral” range, inflation pressures are muted, and Governing
Council members think Germany’s fiscal stimulus efforts will offset a
trade-related drag in the new year,” he said.
Traders are also weighing the impact of a deal U.S.
President Donald Trump said he made with President Xi Jinping to trim tariffs
on China in exchange for Beijing cracking down on the illicit fentanyl trade,
resuming U.S. soybean purchases and keeping rare earths exports flowing.
Sterling fell 0.23% to $1.3162 and reached its lowest
level since April 14. It has weakened in recent days on rising expectations
that the Bank of England will cut interest rates, though the British central
bank is still seen as most likely to hold rates steady next week.
In cryptocurrencies, bitcoin fell 3.13% to $107,989.
(Reuters)
Only the headline is edited by Shafaq News Agency.
