The Japanese Yen edged closer to the psychological 150 per Dollar level on Tuesday, ahead of US inflation data later in the day.
The Dollar increased to an 11-week high of 149.695 Yen at the time of writing, nearing the 150 mark that analysts believe may prompt Japanese officials to intervene in the currency market to bolster the Yen.
The Japanese currency has declined over 5% against the greenback year-to-date and is under ongoing pressure as investors scale back their expectations of the size and timing of the Federal Reserve’s monetary easing cycle.
In addition, Yen bears are encouraged by indications the Bank of Japan will not aggressively hike rates, even if it moves away from negative interest rates in 2024, Reuters reports
“The rate spread convergence that lifted the Yen late last year is being unwound as markets recalibrate expectations in response to a surprisingly resilient US economy and receding prospects of a near-term BoJ hike,” stated Kyle Chapman, FX markets analyst at Ballinger and co.
Elsewhere, the Pound reached its strongest level in close to six months on Tuesday at 85.105 pence per Euro. This is despite UK wages growing at the slowest pace in over a year and Britain’s jobless rate unexpectedly declining.
Sterling also edged up against the Dollar by around 0.1% to $1.2640.
“Labour data in the UK came in stronger than expected, allowing GBP-USD to further rebound,” said UniCredit FX strategist Roberto Mialich.
“A pickup in UK CPI-inflation is also expected for January, which might keep Sterling further firm,” he went on to say.
The inflation data for January is due to be published on Wednesday.
In Switzerland, a large fall in headline inflation saw the Franc decline to multi-week lows against the Dollar and Euro, leading to a rise in bets the Swiss National Bank (SNB) could cut rates as soon as next month.
“The numbers released today reinforce our view that the SNB will be the first G10 central bank to cut rates in this monetary policy cycle,” said Capital Economics Europe economist Adrian Prettejohn.
At the time of writing, the Franc fell 0.7% to 0.8815 per Dollar, its weakest since 11th December, and also declined 0.6% to 0.9484 per Euro, its lowest since 18th December.