Japanese Yen struggles as Fed rate hike odds lift US Dollar
USD/JPY extends its gains for the second successive day, trading around 158.90 during Asian hours on Wednesday. The pair gained ground as the US Dollar (USD) received firm support following the latest inflation report, which cemented market expectations for a Federal Reserve rate hike in December.
The Japanese Yen faced challenges as the odds of a Federal Reserve rate hike increased, boosting the US Dollar. On Wednesday, the USD/JPY pair climbed to 158.90 during Asian trading hours, benefiting from the greenback's strength following a robust inflation report. US Consumer Price Index rose 0.4% month-over-month in October, exceeding expectations, while Core CPI matched September's pace.
The Fed's projections now suggest a 91% chance of a rate increase in December, with expectations for a more hawkish stance from Fed Chair. The Greenback faced potential headwinds from waning safe-haven demand, driven by growing hopes for a resolution to the US-Iran conflict. However, the Yen saw support from the Bank of Japan's policymakers, signaling a readiness to accelerate rate hikes after underlying inflation met their 2% target.
Analysts noted a slight softening in the rate differential backdrop, which could contribute to the Yen's stability amidst the prevailing market sentiment.
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Also reported by 2 other outlets
- Traders raise odds of 50 bps Fed rate hike as CPI rise exceeds expectations economictimes.indiatimes.com
- United States Dollar Index steadies on Fed rate-hike odds fxstreet.com
