- USD/JPY falls below the key 150.00 level and is trading at 149.76, down 0.64%, amid a shift in market sentiment.
- US real estate data shows resilience, with building permits and housing starts exceeding expectations, but failing to support USD/JPY.
- Bank of Japan Governor Kazuo Ueda emphasizes the need for patience in monetary policy, linking future policy changes to sustainable inflation targets and a positive wage-inflation cycle.
He USD/JPY fell below 150.00 in the middle of the American session as market sentiment turned sour due to the expiration of derivative instruments linked to the stock. US housing data shows signs of recovery, although it failed to support USD/JPY, which is trading at 149.76 and losing 0.64%.
US Housing Recovery Fails to Boost USD/JPY as Fed Rate Cut Bets Increase
Wall Street’s recovery stalled on Friday. U.S. building permits beat forecasts at 1.45 million, rose by 1.487 million, or 1.1%, compared to September data, and benefited from low inventory as home builders offer cheaper rates to despite the rise in mortgage rates. Housing starts in October increased 1.9%, from 1.35 million to 1.37 million. The data portray a resilient economy, as it surprised investors after an acceleration of the disinflationary process. At the same time, industrial production and retail sales suggested the economy is finally feeling the shock of the Federal Reserve’s tightening.
Meanwhile, the Dollar Index (DXY), which tracks the value of the Dollar against a basket of peers, falls 0.32% and is trading at 104.05, a headwind for the USD/JPY pair. Additionally, the 10-year US Treasury yield has fallen more than 20 basis points on the week to 4.44%, as investors bet that the Fed will cut rates next year. Interest rate expectations suggest the US central bank would cut rates by 100 basis points by the end of 2024.
Meanwhile, San Francisco Fed President Mary Daly said the Fed is not sure inflation is on track to hit 2%, and that it is too early to declare victory over inflation. Fed Governor Michael Barr said the Fed is probably at or near the maximum needed for interest rates.
On the Japanese front, the latest data justified the Bank of Japan’s (BOJ) dovish stance after GDP contracted in the third quarter, breaking two quarters of consecutive growth.
BOJ Governor Kazuo Ueda stated that patience is required in the face of uncertain inflation dynamics. Ueda added: “The inflation trend will gradually accelerate towards our target of 2% inflation until fiscal year 2025. But this must be accompanied by a positive wage-inflation cycle.” Ueda added that the BOJ could potentially end Yield Curve Control (YCC) and negative interest rates if inflation sustainably reaches the 2% target.
USD/JPY technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
