Dollar stabilizes ahead of Powell's speech, JPY gains on Japanese inflation data
Date
8/25/2024 8:59:48 AM
(MENAFN) On Friday, the dollar held steady as traders awaited remarks from Federal Reserve Chairman Jerome Powell, while bank of Japan Governor Kazuo Ueda attempted to stabilize market sentiments following an unexpected interest rate hike last month. The yen appreciated to 145.78 against the dollar after reports indicated that Japan's core inflation continued to rise for the third consecutive month in July. This increase in inflation, along with the recent interest rate hike, has disrupted market dynamics, particularly impacting popular carry trades where investors borrow yen to invest in higher-yielding assets. This disruption has contributed to a rebound in the yen from a 38-year low it had reached the previous month.
In response to the recent volatility and concerns about a potential U.S. recession, there was a significant global sell-off in early August, though many markets have since regained stability. Ueda reassured investors that the Bank of Japan is ready to raise interest rates further if economic conditions and inflation align with its projections. Meanwhile, the dollar index, which gauges the dollar against six major currencies, remained relatively stable at 101.43 after rising 0.34 percent in the previous session. The index had previously dipped to 100.92, marking its lowest point of the year.
As Powell is scheduled to address an event in Jackson Hole, Wyoming, later Friday, traders are keenly anticipating his comments for indications on potential interest rate cuts. In the forex market, the euro traded at USD1.1119, close to a 13-month high achieved on Wednesday, while the pound was at USD1.3099, just below a 13-month high from Thursday. The Australian dollar was at USD0.6709, and the New Zealand dollar saw a slight increase of 0.1 percent, reaching USD0.61465.
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