The Japanese Yen firms against the US Dollar as WTI crude slides to $86 and traders remain cautious of potential intervention following the disclosure of a record ¥7.98 trillion Yen purchase on July 30.
The pair is trading around 157.91, down 0.36% on the day, as a broadly weaker US Dollar and easing oil-driven inflation fears support the Yen. Traders also remain wary of Japanese intervention after the Finance Ministry revealed a record ¥7.98 trillion of Yen purchases on July 30. A hot US CPI on Tuesday could reverse the move by boosting Fed hike bets.
The Dollar Index has slipped to around 101.80 after peaking at 102.36 post-NFP, pressured by a more than 3% drop in WTI crude and a 10-year Treasury yield near a two-month low at 4.83%. However, hawkish Fed pricing after the 165K payrolls print and Tuesday's CPI could restore Dollar strength.
WTI trades around $86 a barrel, down more than 3% on the day, extending its decline after President Trump downplayed the likelihood of renewed strikes on Iran. The de-escalation of geopolitical risk reduces the conflict premium in prices.
The benchmark 10-year US Treasury yield is down 0.33% on the day at 4.83%, near a two-month low, as the pullback in crude prices eases inflation concerns. Hot CPI or PPI prints this week could push yields back up via stronger Fed hike expectations.
The US Dollar retreated to 101.80 on the DXY index as oil prices dropped over 3% and Treasury yields eased to 4.83%. Despite a strong October NFP print of 165K jobs, the market is looking ahead to Tuesday's CPI data to confirm an 80% probability of a December Fed rate hike.
The US Dollar is retreating after Friday's strong jobs report as oil prices slide and US Treasury yields ease, while the Yen is also supported by the Bank of Japan's signalling of further rate hikes and traders' fear of fresh Japanese intervention.
A hotter-than-expected US CPI on Tuesday could strengthen expectations of a December Fed rate hike, which traders already price at roughly an 80% chance, and lend the Dollar support.
It has partially faded: the Dollar Index fell back to around 101.80 from 102.36 after the payrolls-driven spike, but upcoming CPI and PPI data could revive Dollar strength if they come in hot.
Oil is extending its decline after President Trump downplayed the likelihood of renewed strikes on Iran, easing supply-risk concerns; WTI is down more than 3% at around $86 a barrel.
Falling oil prices are easing inflation concerns, holding yields in check, with the 10-year yield down 0.33% at 4.83%, near a two-month low.