Yen hits new one-year low as focus turns to US inflation data

TOKYO, Nov 13 (Reuters) – The Japanese yen hit a new one-year low against the dollar on Monday, as traders awaited a fresh round of U.S. inflation data expected to offer fresh clues this week the question of whether the Federal Reserve still has work to do. to do to control the pressure on prices.

Most traders will focus on U.S. Consumer Price Index (CPI) numbers due Tuesday after this month’s Fed policy meeting tempered its hawkish stance, although Fed Chairman , Jerome Powell, suggested last week that the battle against inflation may not yet be over.

In addition to the data, more Fed speakers are expected this week and are expected to echo Chair Powell in leaving the door open for further hikes, said Matt Simpson, senior market analyst at City Index.

“Even if we get a lower CPI number, the Fed will likely continue to resist hopes for rate cuts because it’s not in its interest to think about cutting rates, and even then “less to talk about it as long as inflation remains above target,” he said.

Market reaction was muted to the announcement on Friday shortly before the close of foreign exchange trading in New York that Moody’s had lowered its outlook on the US credit rating to “negative”.

The dollar index, which measures the dollar against a basket of currencies, was last mostly flat at 105.80.

There was little relief for the yen, however, which came under pressure from rising U.S. Treasury yields and continued dollar strength.

The Japanese currency briefly touched 151.78 yen against the dollar on Monday, a new one-year low. It last stood at 151.75.

A very interesting number from one of the US economic data released this week “would certainly do the trick” in pushing the dollar/yen towards the 152 range, said Tony Sycamore, market analyst at IG.

“Conversely, maintaining a more favorable risk environment would likely encourage carry buyers to strengthen their positions and test the (Bank of Japan) measure.”

Japanese data released Monday, meanwhile, showed that wholesale inflation slowed below 1% for the first time in just over two and a half years, suggesting that cost pressures that had increased prices began to fade and provided little support to the economy. yen.

An upward trend in prices prompted Japan’s central bank to raise its inflation forecast at its October monetary policy meeting, as markets continued to look for signs that the bank could be on the verge of exit its ultra-accommodating monetary policy.

Elsewhere, the pound held steady at $1.2231 per dollar ahead of Tuesday’s UK average weekly earnings data and Wednesday’s CPI, after last week’s GDP data showed that the economy had failed to grow.

The euro was hovering around $1.0688.

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