Today the USD/JPY reached its highest level since Nov 27th and is +5.61% since the beginning of the year. Last year’s record high of 151.92 is now only 1.68% from the pair’s current level.
The U.S. Dollar Index continues to trade within its recent 104.00/104.50 range, currently at 104.15 (-0.05% today). Support at 104.00 has been tested and held three consecutive days, confirming buying interest and expectation for dollar gains.
The dollar’s biggest decline is -0.74% vs. NZD, driven by expectations that New Zealand’s RBNZ will resume rate hikes this month due to continued rising inflation. A 25bps hike is priced in for February and a similar hike expected in April. The two hikes would lift the cash rate to 6%.
Other standout daily dollar losses: -0.48% vs. NOK & -0.46% vs. AUD. Low and declining volatility in the broader FX market is keeping daily moves to a minimum: -0.14% vs. GBP, -0.13% vs. CAD and -0.06% vs. EUR.
U.S. Treasurys are higher in most tenors in minor net moves. December CPI was revised to +0.2%, down from +0.3% initially reported. Attention now turns to January CPI data which is set to be released next Tuesday.
Canadian payrolls increased by 37.3k, more than double the 15.0k estimate. And Canada’s Unemployment rate dropped to 5.7% from the previous 5.8%.
