The U.S. Dollar hovers near its highest level in two weeks

U.S. Treasury Secretary warns of the continuation of a tight monetary policy

By Raed Alkhedr | @raedalkhedr | 6 December 2023

close (2)
  • The Yen declines following statements from the Deputy Governor of the Bank of Japan.

  • Janet Yellen makes statements about the U.S. economy.

  • Slowdown in the growth of the Australian economy during the third quarter of the current year.

The Yen weakens against most major currencies

The Japanese Yen declined today against a basket of major currencies, following statements from the Deputy Governor of the Bank of Japan. The Deputy Governor indicated that the Bank of Japan will patiently maintain its accommodative policy until achieving the targeted inflation sustainably and steadily.

He emphasized that the Bank of Japan must make the appropriate decision regarding the timing of exiting accommodative policies and measures by examining wages and inflation developments. He added that the full impact of monetary policy will take more than a year to manifest in the economy, and for this reason, they patiently endure negative monetary policy.

Governor of the Bank of Japan, Kazuo Ueda previously stated that the bank might have sufficient data by the end of the year to determine whether it can end negative interest rates. Ueda clarified that once convinced of continuous inflation in Japan accompanied by wage growth, there are various options they can take.

The U.S. Dollar recorded a modest increase against the Japanese Yen in the third session of the week, with the pair trading near the levels of 147.44 Yen.

Janet Yellen warns of the risks of continued high interest rates

U.S. Treasury Secretary Janet Yellen, stated earlier today that the recent weakness in the U.S. job market doesn't necessarily indicate an inevitable recession in the United States, dismissing any signs of such a scenario.

Yellen added that the risks posed by the interest rate environment in the country, including the increasing federal debt, confirm that the continued rise in interest rates represents a significant challenge for the U.S. government. The Treasury Department is prepared to work with Congress on the issue of reducing the additional deficit.

Gross Domestic Product (GDP) in Australia records a worse-than-expected reading

Australia's National Bureau of Statistics released the Gross Domestic Product (GDP) index this morning, recording growth at a rate of 0.2% during the third quarter of the current year, worse than market expectations of 0.5%. This is compared to the previous reading, which recorded growth of about 0.4% in the second quarter.

On an annual basis, the index remained at the same levels as the previous reading, unchanged at 2.1%. This economic growth is the weakest for the Australian economy since the third quarter of 2021, reflecting the latest indications of the economy's response to the strict monetary policy followed by the Reserve Bank of Australia.

It's worth mentioning that the economic growth slowdown alongside the decline in consumer prices in the country reduces the pressures on the Reserve Bank of Australia. This could diminish the likelihood of additional increases in Australian interest rates.