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Major Currencies Anticipate US CPI Release as Chinese 1-Week Repo Rate Declines
in the bustling Tokyo market.
“Major Currencies Anticipate US CPI Release as Chinese 1-Week Repo Rate Declines”
In the bustling Tokyo market, major currencies displayed a composed demeanor as they approached the highly anticipated US Consumer Price Index (CPI) release scheduled for tonight, coupled with the upcoming Federal Open Market Committee (FOMC) meeting tomorrow. Among these currencies, the USD/JPY pair maintained a stable trajectory, hovering around the mid-139 yen range. The prevailing sentiment stemmed from the market’s expectation that the FOMC would maintain the current policy interest rate, contributing to a slightly bearish undertone. Although the pair briefly dipped below 139.33 yen in the afternoon, it swiftly rebounded as buying pressure re-emerged.
Meanwhile, the EUR/USD pair held its ground within the upper range of 1.07. Capitalizing on the prevailing weakness of the US dollar, the euro steadily ascended from the morning session, reaching heights of 1.0796 from around 1.0750, tantalizingly close to breaching the 1.08 threshold. However, the presence of selling pressure near this significant level curtailed further upward movement, resulting in a minor correction thereafter.
Conversely, the EUR/JPY pair exhibited notable strength driven by robust euro buying against the US dollar. Following a modest uptick from the morning level of 150.00 yen, it maintained a steady range around 150.20 yen. However, with the active participation of European investors amplifying euro purchases vis-à-vis the US dollar, the pair experienced a significant surge, reaching approximately 150.60 yen.
Shifting our focus to China, the People’s Bank of China (PBOC) made a strategic move by reducing the 1-week repo rate from its previous standing of 2% to 1.9% after 10:20 am. This adjustment came amidst mounting anticipation for the forthcoming reduction in the medium-term lending facility (MLF) on the 15th and the highly favorable lending rate (LPR) on the 20th. As these expectations grew stronger, they exerted downward pressure on the value of the Chinese yuan, causing the USD/CNY pair to ascend to a level of 7.1672. Notably, this surge surpassed the recent peak observed in the exchange rate between the US dollar and the yuan.
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