The USD/JPY remains well bid, with the pair trading up to 159.50 this morning. Investors continue to debate whether the Bank of Japan will raise interest rates at its monetary policy meeting later this month. The US dollar was firmer across the board this morning as traders balanced ongoing geopolitical uncertainty against expectations for future Federal Reserve policy.
Source: TN Trader
Investors continue to monitor negotiations between Washington and Tehran, with discussions still ongoing but no final agreement yet reached. The cash Dollar Index pushed back up to within the bottom end of its established range of 98.80 to 99.20. Last Friday, it dropped below 98.50 as investors exited ‘safe haven’ trades as hopes were raised that US/Iranian negotiations were about to produce a breakthrough.
Last night, President Trump insisted that he was in no hurry to reach a deal, as it was more important to get a good result than one done in haste and then regretted. Meanwhile, US interest rate expectations remain elevated.
According to the CME FedWatch Tool, traders are pricing in around a 50% probability of rate hike(s) from the Fed before year-end. This expectation comes with concerns that energy-related inflation pressures could persist for some time to come.
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