USD/JPY climbs to 158.90 as strong October CPI data and a 91% market-implied probability of a December Fed rate hike support the Greenback, despite narrowing 10-year yield spreads.
October CPI beat forecasts (0.4% m/m vs 0.3% expected) and markets now price a ~91% chance of a December Fed rate hike, pushing USD/JPY to around 158.90 for a second day of gains. Goolsbee's hawkish 8/10 speechtracker score adds Dollar support. However, the 10y UST/JGB spread narrowed 5bp to 216bp, failing to hold above 220bp, which contained the pair's momentum.
October CPI came in above forecasts at 0.4% m/m with core at 0.3% versus 0.2% expected, cementing a ~91% market-implied probability of a December Fed rate hike. Goolsbee's hawkish tone (8/10 speechtracker score) signals restrictive policy for longer, typically supportive for the Dollar. Offset by fading safe-haven demand as US-Iran tensions ease.
The Yen is under pressure from a hawkish Fed backdrop with ~91% odds of a December US rate hike. However, the BoJ October meeting summary showed policymakers supporting faster hikes after underlying inflation hit the 2% target, with one urging the next increase 'without becoming overly cautious'. A lingering internal divide over sluggish consumption and uncertain AI-driven demand keeps the BoJ path uncertain, muting Yen support.
The US Dollar extended gains against the Japanese Yen, trading at 158.90 as October CPI data exceeded forecasts. Markets now price a 91% probability of a Federal Reserve rate hike in December, bolstered by hawkish commentary from Fed official Goolsbee.
The US Dollar strengthened after October CPI beat forecasts and markets now price roughly a 91% probability of a Fed rate hike in December, while hawkish comments from Fed's Goolsbee reinforced expectations of tighter policy for longer.
Bank of Japan policymakers voiced support for accelerating rate hikes after underlying inflation reached the 2% target, with one member urging the next increase 'without becoming overly cautious', which supports expectations of a December BoJ hike. Narrowing US-Japan 10-year spreads (216bp) also limit the pair's upside.
Yes, according to the article markets price approximately a 91% probability of a Fed rate hike in December after the October CPI beat forecasts.
The article reports that BoJ policymakers voiced support for accelerating rate hikes, with one member urging the next increase 'without becoming overly cautious', bolstering expectations for a December hike, though several members cautioned against moving too quickly.