2 min to read
Dollar-Yen Trading Rangebound in the 139 Yen Territory
Surprise Rate Hike by RBA.
“Dollar-Yen Trading Rangebound in the 139 Yen Territory, Surprise Rate Hike by RBA”
In the global financial markets, the US ISM Non-Manufacturing Index unexpectedly deteriorated, causing the dollar to decline from the mid-140 yen range to 139.20 yen level. As the Tokyo market opened, trading in the upper 139 yen territory became relatively subdued, with prices fluctuating around the mid-139 yen level. Market participants have turned their attention to the upcoming Federal Open Market Committee (FOMC) meeting, which is expected to maintain interest rates. This has led to an upward adjustment in market expectations, ranging from the 70% level to the 80% range ahead of the release of the US ISM Non-Manufacturing Index. Consequently, the potential for further gains in the dollar has been somewhat limited, resulting in selling pressure emerging around the 139 yen level. However, there is a prevailing belief in the medium term that the dollar will strengthen, leading to renewed buying interest near the recent low point following the ISM release.
Other major currencies have also experienced muted movements, with the Eurodollar trading within a narrow range of 23 points in the low 1.07 territory. The Pounddollar has exhibited fluctuations within a 30-point range around the 1.24 level.
At 13:30, a surprising announcement was made regarding the policy rate decision by the Reserve Bank of Australia (RBA). Contrary to widespread expectations, the central bank implemented a 0.25% rate hike, resulting in a strengthening of the Australian dollar. Prior to the meeting, market expectations had leaned towards a status quo following the previous meeting in May. However, the unexpected rise in April’s Australian Consumer Price Index, coupled with the minimum wage hike by Australian authorities and the positive figures on Australian corporate wage trends, had sparked speculation of a potential rate hike. Although short-term interest rate markets had priced in a rate hike at around 16% just before the announcement, expert opinions still leaned towards a steady outlook. However, there was a slightly stronger expectation of a rate hike among a third of the experts.
Consequently, the Australian dollar has appreciated against the US dollar, rising from around 0.6625 to 0.6681, and also strengthened against the yen, climbing from approximately 92.45 yen to 93.14 yen.
Visit XM Official Website.
