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Fed and ECB officials signal caution on inflation
The Japanese Yen weakens amid rising global bond yields, while Fed and ECB officials signal cautious optimism on inflation and growth
Japanese Yen weakens further as U.S. and European bond yields rise
U.S. Fed’s Daly notes economic progress but stresses more work is needed
ECB’s Rehn says Eurozone disinflation is on track but growth outlook weakens
Japanese Yen extends losses amid rising bond yields, silence from Tokyo
The Japanese Yen's broad decline deepened during a subdued Asian trading session, with the currency continuing to weaken against major counterparts. A major driver behind the Yen’s slide is the ongoing surge in U.S. and European bond yields, which is eroding the appeal of the Yen as a low-yielding currency. More notable, however, is the lack of intervention from Japanese authorities, with no verbal responses even as USD/JPY pushed past the critical 152 mark. The absence of official commentary has fueled speculation that the Yen could depreciate further. Analysts are eyeing 155 as the next psychological threshold for USD/JPY, with concerns that if Japanese officials remain silent, the pair may test 160, especially as U.S. 10-year Treasury yields approach 5%.
Fed’s Daly sees progress but warns work remains
San Francisco Federal Reserve President Mary Daly struck an optimistic tone in a series of social media posts, stating that the U.S. economy is in a much “better place” than it was two years ago. Daly pointed to the significant decline in inflation and a labor market that has shifted onto a “more sustainable path.” While she acknowledged improvements, she cautioned that the Fed’s goals of price stability and full employment are not yet fully achieved. According to Daly, the risks to these dual mandates are now “balanced,” signaling that while progress has been made, challenges remain.
ECB’s Rehn cautious on inflation outlook
Olli Rehn, a member of the European Central Bank’s Governing Council, indicated that the Eurozone's disinflation process is “well on track.” However, he also warned that the region's economic growth outlook has “weakened quite clearly” in recent months, which could increase downward pressure on prices. Despite the slowdown in growth, Rehn stated he is “not yet so concerned” about inflation undershooting the ECB’s 2% target, noting that inflation in services and wages remains elevated. He added that the “danger of undershooting is not yet verified,” suggesting the ECB will remain cautious before signaling any policy shift.
Bank of Canada cuts key rate by 50 basis points
The Bank of Canada delivered an oversized interest rate cut of half a percentage point on Wednesday, picking up the pace of easing borrowing costs.
