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Japan's Yen worries resurface as RBNZ eyes rate cut
Japan's yen faces renewed pressure as verbal interventions from officials signal growing concern over a potential drop below the 150 level, while the RBNZ is expected to cut rates to counter inflation risks amid a cooling economy
Japanese officials express urgency in monitoring currency market fluctuations
Global central banks, including the RBA, Fed, and ECB, will release meeting minutes this week
U.S. CPI data and UK GDP figures are key upcoming economic indicators influencing market expectations
Japan steps up verbal intervention as Yen faces renewed pressure
The Japanese yen briefly touched above the 149 level against the dollar during a subdued Asian session, as the currency came under renewed pressure from the resurgent U.S. dollar. Traders have been pulling back from bets on a 50 basis point (bps) Fed rate cut in November, boosting the greenback. Rising U.S. and European bond yields have also weighed on the yen, raising concerns among Japanese officials about further declines beyond the key 150 level.
Japan’s top currency diplomat, Atsushi Mimura, stated that the government is closely watching the currency markets, including speculative moves, with a “sense of urgency.” Finance Minister Katsunobu Kato echoed the sentiment, warning that rapid currency fluctuations could harm corporate activities and livelihoods, and emphasized that the government would take appropriate action as needed.
Global central banks in focus amid expectations for RBNZ rate cut
The Reserve Bank of New Zealand (RBNZ) is expected to cut rates by 50 bps this week, bringing the Official Cash Rate (OCR) to 4.75%. Following a surprise 25 bps cut in August, inflation pressures have eased, and there is a growing risk that the central bank may undershoot its 2% target unless it acts decisively.
The Reserve Bank of Australia (RBA), Federal Reserve, and European Central Bank (ECB) are also set to release meeting minutes. The RBA is likely to maintain a hawkish tone, signaling no imminent rate cuts. Meanwhile, the Fed’s minutes may reaffirm that its recent 50 bps cut was a corrective step and not indicative of a broader easing cycle. For the ECB, the minutes are expected to have less impact ahead of its October 17 meeting, as economic conditions and sentiment continue to evolve rapidly.
Key economic data releases will further drive market sentiment this week, with U.S. Consumer Price Index (CPI) figures taking center stage. Last week’s robust non-farm payrolls data has already dampened expectations of a 50 bps Fed rate cut in November. Any upside surprise in CPI could swing expectations between a hold and a more cautious 25 bps cut. In the UK, GDP data will be crucial for the Bank of England’s rate decision, while in Canada, jobs data will be closely watched as the Bank of Canada contemplates a 50 bps cut amid cooling inflation.
