The Japanese yen remains on the back foot after heavy selling in the face of dollar strength yesterday. US PPI climbed higher than expected and there is a growing belief that Trump’s tariff’s will lead to higher inflation and therefore higher rates.
The USD/JPY jumped from below 111.00 to above 112.00 yesterday and is trading around 112.3 this morning. The AUD/JPY is setting up for a test of 83.00 The GBP/JPY and EUR/JPY are maintaining their upwards trajectory.
Dollar strength is the main driver, rather than yen weakness per se. The dollar index is higher for the fourth day in a row this week, forcing other dollar pairs on the back foot. The EUR/USD is unchanged after two days of selling, while the GBP/USD has a negative bias once again. By contrast, the AUD/USD is climbing.
The USD/CAD is unchanged after spiking higher yesterday despite the BOC raising interest rates by 0.25% as expected. The forward guidance was more dovish than expected.
Gold slumped back to the lows yesterday and is holding just above $1240 today.
12.30 brings the release of the ECB’s monetary policy meeting accounts.
US CPI and unemployment claims are at 13.30.
The USD/JPY bull run may have further to go as Trump’s tariffs spark fears of goods prices and therefore inflation across the US.