LONDON, Sept 12 (Reuters) – The yen posted its biggest single-day gain since mid-July on Wednesday as comments from Japan’s central bank chief about the possibility of ending negative interest rate policy resonated with markets. It then fell on Tuesday.
Meanwhile, the dollar regained ground after posting its biggest single-day decline since July 13 on Monday, while the pound fell after mixed UK labor market data.
Bank of Japan Governor Kazuo Ueda said in a weekend newspaper interview that the BOJ will have enough data to decide whether it can lift negative interest rates by the end of the year, and the yen weakened against the dollar on Monday. It said it was the biggest single-day increase since July 12.
The Japanese currency fell 0.2% to 146.915 to the dollar, after hitting a one-week high of 145.91 in the previous session.
“Mr. Ueda’s comments were a little more balanced than the market reaction would suggest,” said Adam Cole, chief currency strategist at RBC Capital Markets.
“Japan is still far from achieving a sustainable 2% inflation benchmark. Monday’s comments don’t change much for me,” Cole added.
Since the US Federal Reserve began an aggressive rate hike cycle last year, the yen has been extremely weak against the dollar as a result of widening interest rate differentials with the US, with the Bank of Japan remaining a dovish outlier. is under great pressure.
But Hiroshige Seko, a senior member of Japan’s ruling party, took a different view on Tuesday, saying he took Ueda’s comments to mean the central bank would continue monetary easing.
Elsewhere, the dollar reversed some of its losses from the previous session, and the euro fell 0.3% to $1.0716, after hitting a one-week high of $1.0771, ahead of Thursday’s European Central Bank policy announcement. It became a dollar.
Sterling fell after a mixed UK labor market report showed signs of further cooling in the three months to July, but wage growth continued to rise rapidly and outpace inflation. .
“If you drill down and remove the public sector, private sector salaries have been flat from June to July, with very little increase,” said James Smith, an economist at ING.
“Unemployment is trending higher, but the labor market data does not call for further rate hikes.”
The pound last fell 0.3% against the dollar to $1.2471, little changed against the euro.
Focus on US inflation data
Traders are now focused on Wednesday’s release of U.S. inflation data for August and whether the U.S. Federal Reserve will need to raise interest rates further.
The U.S. dollar index, which ended last week on an eight-week winning streak, rose 0.2% to 104.80 after falling 0.5% in the previous session, its biggest one-day decline since July 13.
“The Fed is very sensitive to incoming inflation data, so the U.S. data is the main event this week,” RBC’s Cole said, adding that more expectations for core inflation are leading to downside risks to the dollar. pointed out that it is larger. More than consensus.
“We are negative on the release itself as the inline numbers are disappointing for the dollar,” Cole added.
The Australian dollar was last down 0.2% at $0.6419, and the New Zealand dollar was down 0.4% at $0.5899.
Both the onshore and offshore yuan found support near one-week highs, last buying at 7.2925 yuan and 7.3109 yuan to the dollar, respectively.
Both posted their biggest daily gains against the dollar in nearly six months on Monday.
Reuters reported that the People’s Bank of China is stepping up oversight of large dollar purchases by domestic companies as pressure to weaken the yuan mounts.
Among cryptocurrencies, Bitcoin rose about 4% to $26,141 after falling below $25,000 for the first time in three months on Monday.
Report by Samuel Indyk and Rae Wee.Editing: Sam Holmes, Ed Osmond, Susan Fenton
Our criteria: Thomson Reuters Trust Principles.