The Japanese Yen Fell And USD/JPY Reached Level Of 130, The EUR/USD Pair Lost Its 1.09 Level And Agian Is Around 1.0880
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The US dollar fell today on the possibility of less aggressiveness from the Fed. Poor trading conditions are likely to continue as many major hubs in Asia are closed for Lunar New Year celebrations. Two very important data will be published in the US this week: first look at US GDP in Q4 on Thursday followed by Core PCE on Friday.
USD/JPY
The Japanese yen fell towards 130 to the dollar, moving further back from multi-month highs as the Bank of Japan remains committed to its ultra-low interest rate policy despite rising inflation and increasing market pressure.
Last week, the central bank countered speculation about another policy adjustment by keeping interest rates very low and leaving its yield control policy unchanged.
Meanwhile, traders are eyeing the BOJ meeting in March for a potential move as well as April when a new BOJ governor will step in.
The USD/JPY pair started the week below 129.50, but rose quickly and passed the 130.00 level. At the time of writing, USD/JPY is trading at 130.3640.
EUR/USD
The euro hit a nine-month peak against the dollar on Monday as comments on European interest rates signalling additional jumbo rate rises contrasted with market pricing for a less aggressive Federal Reserve. The euro is also being supported by an easing of recession fears amid a fall in natural gas prices.
ECB Governing Council member Klaas Knot said on Sunday: "expect us to raise rates by 0.5% in February and March, and that we will not be done by then, and the next steps will be taken in May and June." His colleague Olli Rehn he noted that he saw grounds for significant interest rate hikes.
The ECB's hawkish expectations coupled with increased bets on a slowdown in the pace of US Federal Reserve (Fed) tightening are helping to reduce the monetary policy divergence between the two central banks, which in turn favors the EUR/USD pair's rally.
EUR/USD pair has lost its traction and pulled away from the multi-month it set above 1.0900 earlier in the day.
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GBP/USD
Economic affairs in the UK are somewhat calmer with attention being paid to the current round of industrial action hitting the UK and the perceived unfreezing of UK-EU relations.
The British currency recently fell 0.32% to $1.2359 and lost more against the euro. The core CPI, which excludes energy, food, alcohol and tobacco and which some economists consider a better guide to inflation trends, remained unchanged at 6.3%. Market prices point to a 70% chance of a 50 basis point rate hike at the Bank of England's February meeting.
Sterling pulled back from a seven-month high against the dollar on Monday, which hit during the Asian hours. GBP/USD turned and fell towards 1.2350 during the European trading hours on Monday.
AUD/USD
The RBA did not rule out another rate hike at its February meeting as mentioned in previous minutes and remains divided between no change and a 25 basis point increase, Wednesday's inflation printout could bring more clarity. On a positive note for the Australian dollar, commodity prices are projected to remain elevated throughout 2023, mainly based on China reopening and coal exports to European countries.
AUD/USD is hovering around 0.6980-85, defending early week gains on a weak Monday morning in Europe. The pair of the Australian failed to stay above $0.70, but is trading close to this level, so a re-breakout cannot be ruled out.
Source: investing.com, finance.yahoo.com
