Key Takeaways:
- 💵 Dollar rose to a 10-week peak against the yen as confidence in Fed’s approach increased
- 📊 Dollar index close to two-month top, traders reducing bets on U.S. rate cuts
- 📈 Sept’s CPI likely to show steady core U.S. inflation at 3.2% year-on-year
- 🏦 Fed’s focus on keeping labor market healthy, less concern about resurgent inflation
- 🔮 Traders see 85% odds of 25 basis point rate cut by Nov. 7 policy decision
- 🇦🇺 Australian dollar up 0.11% to $0.6726, rose on Chinese equity rally and swap program
- 🇨🇳 China to announce fiscal stimulus on Saturday, expected to support economy and Asian currencies
- 💰 Dollar index little changed at 102.93, close to highest level since mid-August
- 💵 The USD/JPY forecast is facing challenges as market participants await US CPI data.
- 📈 Market sentiment for USD/JPY remained positive after a rally following strong labor market data.
- 🌐 Federal Reserve rate cut expectations shifted after the September jobs report and Powell’s hawkish tone.
- 📉 Technical analysis shows a bearish divergence in the RSI, indicating potential weakening bullish momentum.
- 🛑 Euro remained near its lowest level since August 13 against the dollar at $1.0935.
Article:
The US dollar has surged to a 10-week peak against the yen, driven by growing confidence in the Federal Reserve’s approach to monetary policy. The dollar index also remains near a two-month high, with traders reducing their bets on potential US rate cuts.
Market expectations are for September’s CPI data to reveal steady core US inflation at 3.2% year-on-year. The Federal Reserve is focusing on maintaining a healthy labor market, with less concern about resurgent inflation, as traders predict an 85% chance of a 25 basis point rate cut by the November 7 policy decision.
The Australian dollar saw a slight increase following an equity rally in China and anticipation of fiscal stimulus aimed at supporting the Chinese economy and boosting Asian currencies. Meanwhile, technical analysis indicates a bearish divergence in the RSI, suggesting a potential weakening in bullish momentum.
Overall, market sentiment remains positive for the USD/JPY pair following strong labor market data but uncertainties persist as traders await key economic indicators like the US CPI report. The euro, on the other hand, continues to trade near its lowest level since mid-August against the US dollar.