News Tech: The yen fell on Tuesday as US Treasury yields climbed to almost two-year highs and the Bank of Japan underscored its determination to maintain its ultra-accommodative monetary policy. The dollar gained 0.37% against the yen on the outcome of the Bank of Japan meeting, trading as high as $114.5 on the eve of the meeting before rising to $115.05 per dollar.
After that, the profit decreased to 114.84. “The global reflationary trade and rising US yields point to downward pressure on the yen,” said Carlos Casanova, senior Asia economist at UBP.
The BOJ raised inflation expectations at its monetary policy meeting on Tuesday but will maintain an ultra-accommodative monetary policy framework as inflation is likely to fall well below its 2% target over the next few years. emphasized determination. However, the dollar gained less support against other major currencies. The euro fell 0.09% at $1.1398, the pound stabilized at $1.3635 and the Dollar Index, which tracks the currency against its six peers, rose just 0.07% on the day to the median of its recent range of 95.325.
His 2-year yield in the US, which tracks short-term interest rate expectations, has crossed 1% for the first time since February. 2020 was the last at 1.036%, up nearly 7 basis points. His 10-year yield on the benchmark rose more than 6 basis points to 1.8550%, the highest since January 2020, when the market saw him raise rates once in March and three more by the end of the year. is the highest standard. “Furthermore, while the Bank of Japan is expected to remain very accommodative for longer, inflation will rise modestly, remaining at around 1.0% in 2022,” Casanova added.
“The conundrum on everyone’s mind is whether the dollar is buying relative to yields or whether the news is priced in favor of the dollar,” said Ray Attrill, head of FX strategy at National Australia Bank. That’s what it means,” he said. Abnormal theories include investors who reacted early to the fact that the dollar had historically peaked around the time the Fed hiked rates, and to the fact that they expected global economic growth. said there is. But he said he wasn’t convinced by any of the arguments.