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Affected by the strength of the U.S. dollar and rising U.S. Treasury yields, USD/JPY rose slightly to around 148.70 points late in the U.S. session and was at 148.68 at press time. Over the weekend, speeches by U.S. Federal Reserve Chairman Jerome Powell spurred capital flows into the U.S. dollar, while U.S. Treasury yields soared.
USD/JPY rebounds on Fed Chairman Powell’s comments and strong services PMI
Federal Reserve Chairman Jerome Powell said most policymakers expect three interest rate cuts during the year, adding that “nothing is going to happen in the interim that would make me think people would change their forecasts significantly.” He pushed back on calls for a rate cut in March, adding that the Fed could cut rates more quickly if inflation continues to trend lower.
In addition, non-manufacturing activities (also known as the services purchasing managers index) released by the Institute for Supply Management (ISM) rebounded in January, rising to 53.4 from 50.5 in December.
USD/JPY was higher as the U.S. 10-year Treasury yield surged to 4.16%, up nearly 14 basis points. Meanwhile, the U.S. Dollar Index (DXY), which tracks the greenback’s performance against six other currencies, was up 0.52% at 104.50 points.
Japan’s economic calendar will be light, focusing on annual average cash income and household spending data, which are expected to improve following November. In the United States, Cleveland Fed President Loretta Mester, Minnesota Fed President Neil Kashkari and Boston Fed’s Susan Collins will deliver Fed speeches.
