The Japanese yen fell sharply across the Asian market on Monday against a basket of major and minor currencies, deepening its losses for the fourth consecutive day against the US dollar, hitting a 34-year low after trading below the 160 yen per dollar barrier for the first time since April 1990.
Concerns over interest rate differentials between Japan and the United States escalated following a less aggressive Bank of Japan meeting last week, with expectations of Federal Reserve rate cuts pushed back to July.
The Japanese currency has suffered heavy losses since the BOJ abandoned negative interest rates in March, a move that was widely expected in global markets.
Japanese authorities have repeatedly warned against sharp moves and excessive weakness in the yen, but have not issued any official announcements about intervening to support the domestic currency.
Japanese Authorities
Japanese authorities have repeatedly warned against “excessive” moves in the yen, but have not issued any official announcements about supporting the currency. Some market watchers had expected the authorities to intervene at the 155 level, but the yen fell past that level last week and traded below the 160 barrier earlier this week.
Finance Minister Shunichi Suzuki said on Friday that Japan is concerned about the negative impact of a weak yen and that it is closely monitoring currency movements and is ready to take full steps in response.
Gold Dips as Hopes for US Rate Cuts Fade, Reaches These Levels
Gold prices fell during today’s trading, Monday, as hopes for an early rate cut this year waned, while focus shifted to the US Federal Reserve meeting and US non-farm payroll data due out this week for more clarity on monetary policy.
In the short term, gold faces some challenges due to the potential delayed timeline for rate cuts. However, if gold remains in the $2200-$2350 range, the precious metal will be well-positioned to benefit from any potential downturns in US macro data in the coming quarters.”
The Federal Reserve’s policy meeting from April 30 to May 1 and the non-farm payroll data due out on Friday are key for the markets this week. The Fed is expected to keep the benchmark interest rate steady at 5.25%-5.5% at this meeting.
Investors are currently pricing in one rate cut this year and expect it to come in November, according to Investing.com’s US interest rate tracking tool, after a series of strong US inflation data and hawkish rhetoric from Fed officials, including Chairman Jerome Powell. Rising rates reduce the attractiveness of holding non-yielding gold.
Gold and Dollar Now
Gold futures are now down 0.05% to $2346 an ounce. While spot gold is down about 0.15% to $2335 an ounce. On the other hand, the dollar index is down 0.32% to 105.465 points.
Other Metals
Spot silver rose 0.3% to $27.24 an ounce, platinum gained 0.5% to $919.95, and palladium rose 0.1% to $954.94.
Oil Down 1% as Israel-Hamas Ceasefire Talks Continue
Oil prices fell in early Asian trading on Monday, giving up some of the gains they made on Friday, as peace talks between Israel and Hamas in Cairo eased concerns about a wider conflict in the Middle East. US inflation data also reduced expectations of an early rate cut.
Brent crude futures fell $1 or 1.1% to $88.50 a barrel before edging up to $88.55 by 0149 GMT. West Texas Intermediate crude futures fell 84 cents or 1% to $83.01 a barrel. A White House spokesman said Israel had agreed to listen to US concerns about the humanitarian implications of a possible Israeli incursion into the city of Rafah.
Markets are also watching the Federal Reserve’s monetary policy review on May 1. Data on Friday showed that US inflation rose 2.7% in the 12 months to March, above the Fed’s 2% target. Lower inflation raises the likelihood of rate cuts, which in turn would boost economic growth and oil demand. On the other hand, a stronger dollar raises expectations that interest rates will remain high for longer. A rising dollar makes oil more expensive for holders of other currencies.
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