Daily Digest Market Movers: Japanese Yen is underpinned by hawkish BoJ talks
- A rise in Tokyo inflation revives bets that the Bank of Japan will pivot away from its ultra-easy monetary policy settings as soon as this month and continues to underpin the Japanese Yen.
- The Jiji News Agency reported on Wednesday that BoJ might consider ending negative interest rates amid expectations that this year's pay negotiations will yield solid results to boost consumption.
- Data released on Thursday showed that real wages for Japanese workers shrank in January for the 22nd straight month, albeit at the slowest pace in over a year on weakening price pressures.
- BoJ policymaker Junko Nakagawa noted that the central bank is gathering information to make policy decisions while Japan's economy makes steady progress toward the achievement of the price target.
- Federal Reserve Chair Jerome Powell told US lawmakers on Wednesday that the central bank will cut interest rates this year, though wants to see more evidence that inflation is falling to the 2% target.
- Minneapolis Fed President Neel Kashkari said that he had pencilled in two interest-rate cuts in 2024 and added that he may reduce the number of cuts in the wake of the incoming stronger macro data.
- The Automatic Data Processing (ADP) reported that private-sector employment in the US rose by 140K in February, less than the 150K expected, while wages increased at the slowest pace in 2-1/2 years.
- The data points to signs of a cooling labor market and keep the path open for Fed rate cuts later this year, which continues to undermine the US Dollar and further exerts pressure on the USD/JPY pair.
- Traders now look to Powell's second day of testimony before the Senate Banking Committee, which, along with the US Weekly Initial Jobless Claims and Trade Balance data, could provide some impetus.
- The focus, however, will remain glued to the release of the closely-watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday.
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