Yen rose on Monday in the urge from the optimistic Japanese growth data, while the dollar floated near the lowest in two months after investors turned off their bets on US tariffs.
The last dollar traded down 0.58% to Yen at 151.44 after the data shows that the Japanese economy grew more than expected in the fourth quarter of increasing business expenditure and increasing surprise in consumption.
It strengthens the case for further interest rate increases from the Bank of Japan this year. The market now gives prices around 37 basis points worth an increase in December.
“The key taking for us is that nominal household consumption grows significantly faster than real consumption and their differences remain broad, which can activate the mode of BOJ’s inflation battle,” said Krishna Bhimarapu, APAC economist at the State Street Global Advisors.
“At the very least, this data eliminates the concern of congested consumption, and positive for Boj to provide another increase, which can now come faster than later.”
In a wider market, the dollar is struggling to compensate for losses after sales behind the weak US retail sales data on Friday and when investors support the delay in the implementation of President Donald Trump’s leadership tariff.
The US stock market and bonds are closed, with traders for the President’s day, although the dollar is still traded on the international market.
The last dollar index was established at 106.76, flat on that day, after falling 1.2% last week. It fell to 106.56 on Friday, the lowest since mid -December.
Geopolitics in focus
Geopolitics remain focused on the report that the talks aimed at ending the Russian-Ukraine conflict will begin in Saudi Arabia this week.
The last Euro fell 0.1% at $ 1,0482, after trading at the highest in two weeks on Friday around $ 1,051.
Sterling rose 0.1% at $ 1,2596, after reaching the highest two months around $ 1,263 on Friday.
“The weakness of the dollar … is a function of the two ongoing optimism that maybe the tariff will not be the same as the expected – that of course, it still needs to be seen, the story of Ukraine is still bubbling in the background there,” said Rodrigo Catril, a senior strategist FX at National Australia Bank.
“And then the data, of course, play with the idea that maybe the exception of the US is out of energy, so it burdens the US dollar.”
The Australian dollar rose to the highest level of two months against a weaker dollar and finally bought $ 0.6366, before the interest rate decision from the Reserve Bank of Australia (RBA) on Tuesday.
The RBA is expected to give a quarter point cutting, marking the first reduction in more than four years because it joins other central banks in their loosening cycle.
Kiwi also increased the peak of two months before peeling some of the benefits to be traded on $ 0.5736, in front of the Bank Selandia New Bank’s reserve policy decision on Wednesday, where the market has a price in reducing 50 basis points.
Source: Reuters (reporting by Rae Wee in Singapore and Harry Robertson in London; Editing by Sonali Paul, Bernadette Baum, Angus Macswan and Ed Osmond)
