Yen hits annual high against dollar amid US presidential debate, anticipation of inflation data
Date
9/11/2024 6:04:25 AM
(MENAFN) The Japanese yen surged to its highest level against the U.S. dollar in a year on Wednesday, coinciding with the first presidential debate between Kamala Harris and Donald Trump, which takes place amid a closely contested race leading up to the November election. Traders are also closely monitoring the upcoming U.S. inflation report, anticipated to provide vital clues regarding the Federal Reserve's potential interest rate cut next week.
Additionally, the yen was bolstered by statements from bank of Japan board member Junko Nakagawa, who reiterated in a speech that the central bank will continue to raise interest rates should the economy and inflation align with its projections. This has had a tangible impact on the yen's performance, with the dollar dropping approximately 0.68 percent to 141.50 yen, a level unseen since January 2, before stabilizing at 141.83 yen by 01:49 GMT. Both the yen and the dollar have shown sensitivity to the yield movements on the 10-year U.S. Treasury note, which has continued to decline overnight, reaching 3.635 percent for the first time since June of the previous year.
Meanwhile, Shoki Omori, a senior analyst at Mizuho Securities in Japan, noted that Harris appeared to gain confidence in the debate, clearly presenting her economic policies, which seemed to influence market perceptions. In parallel, Nakagawa highlighted that "real interest rates are still low," suggesting further room for monetary policy tightening by the Bank of Japan. Omori added that these comments contributed to the yen's rise against the dollar.
The euro also saw gains, climbing by 0.16 percent to USD1.1038, recovering from an overnight low of USD1.10155, marking its lowest level since August 19. Similarly, the British pound increased to USD1.3089, following a dip to USD1.3049 in the previous session, its lowest since August 21. In contrast, the U.S. dollar index, which measures the dollar's performance against a basket of six major currencies, declined by 0.15 percent to 101.49 after hitting a one-week high of 101.77 on Tuesday.
The Federal Reserve is widely expected to implement its first interest rate cut in over four years on September 18, although opinions remain divided regarding the extent of the cut. A poll forecasts the U.S. Consumer Price Index (CPI) to rise by 2.6 percent on an annual basis in August, down from a 2.9 percent increase in July, indicating a possible easing of inflationary pressures.
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