By Harry Robertson and Ankur Banerjee
LONDON/SINGAPORE, March 1 (Reuters) – The yen slipped against the dollar on Friday after Bank of Japan governor Kazuo Ueda said it was too soon to declare victory on pulling inflation up to a desired level.
Meanwhile, the dollar was little changed against its other major peers, bitcoin took a breather after surging last month, and China’s yuan dipped after weak manufacturing data.
Against the yen JPY=EBS, the dollar was up 0.26% at 150.36, after rising 6.3% in the first two months of the year. The moves put the Japanese currency close to its weakest levels since November and not far off the lowest since 1990.
Ueda said “I don’t think we are there yet” on Friday when asked whether a sustainable 2% rate of inflation was in sight.
In contrast to most world economies’ recent battles with surging inflation, Japan is trying to boost price increases after years of anaemic demand.
Ueda’s comments appeared to push back against a colleague’s suggestion on Thursday that hinted at the need to exit ultra-loose monetary policy, boosting the yen.
“It’s sort of a ‘good cop, bad cop’ thing going on in Japan at the moment,” said Rob Carnell, ING’s regional head of research for Asia-Pacific.
“I think the markets been getting excited again about the possibility of an April move … in the big scheme of things, does it really matter if it’s April or June? As long as it’s coming.”
The dollar index =USD, which measures the U.S. currency against six rivals, was little changed at 104.13. It rose 0.3% on Thursday after inflation data, and 2.7% across January and February.
The data showed U.S. prices, as measured by the Federal Reserve’s target PCE index, picked up in January in line with expectations, while annual inflation slipped to the lowest in three years.
Traders who bet on interest rates now see a roughly 67% chance of the first Fed rate cut coming in June, up from 63% on Thursday, according to CME’s FedWatch tool.
“We are seeking out fresh news,” said Jane Foley, head of FX strategy at Rabobank, “whether that’s going to come from the ECB (European Central Bank) and a change in expectations, or further alteration of the market’s view about the ability of the Fed to cut even in June.”
She added: “Right now we’re trading sideways, waiting for fresh direction.”
The euro EUR=EBS was last roughly unchanged at $1.0807, reacting little to figures which showed euro zone inflation slowed slightly less than expected to 2.6% in February, from 2.8% in January.
The euro zone’s currency has traded within a range of $1.07 to $1.11 since November as investors have struggled to work out when the ECB and the Fed will start cutting rates.
China’s offshore yuan CNH=D3 weakened slightly after survey data showed factory activity contracted for a fifth straight month in February. It last changed hands at 7.2139 per dollar, down around 1.3% since the start of the year.
Bitcoin BTC= was last up 1% at $61,900 after clocking its biggest monthly gain since 2020 in February, driven by cash pouring into exchange-traded funds.
The franc CHF=EBS showed little reaction to Swiss National Bank Chairman Thomas Jordan announcing he would step down after 12 years. It was last down slightly at 0.8856 francs per dollar.
World FX rates https://tmsnrt.rs/2RBWI5E
The yen has tumbled against the dollar since 2022 https://reut.rs/4bVOrTK
(Reporting by Harry Robertson in London and Ankur Banerjee in Singapore, Editing by Shri Navaratnam, Kim Coghill, Tomasz Janowski and Angus MacSwan)
(([email protected]; [email protected]))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.