On February 25th, the Japanese Yen experienced a sharp decline following renewed pressure on the central bank's monetary policy from Prime Minister Taro Kono. According to a report by the Mainichi Shimbun citing unnamed sources, during a meeting last week with Bank of Japan Governor Kazuo Ueda, Prime Minister Kono explicitly voiced concerns over potential further interest rate hikes, adopting a noticeably firmer stance compared to their previous meeting in November. The Bank of Japan attempted to downplay the appearance of political interference. Bloomberg reported that Governor Ueda stated no specific demands were made by the Prime Minister during the discussion. For investors, such shifts in political sentiment often influence market pricing of the central bank's future policy path, particularly when communication channels are limited and information is not fully symmetrical.
Furthermore, Federal Reserve Bank of Boston President Susan Collins indicated that interest rates will likely need to remain at their current level "for a while," given recent economic data showing labor market improvements while inflation risks persist. Speaking at a discussion hosted by the Boston Fed on Tuesday, Collins noted the labor market is showing "at least some more unusual signs of stability." She also emphasized the need for more evidence that inflation is declining towards the 2% target. "I believe maintaining the current policy rate for some time is likely appropriate," she said, adding, "After a cumulative 175 basis points of easing over the past year and a half, we are now in a mildly restrictive range and may be quite close to the neutral level." The neutral level refers to an interest rate that neither stimulates nor restrains the economy.
Key data to watch today includes Germany's fourth-quarter seasonally adjusted GDP growth rate revision, Germany's March GfK Consumer Confidence Index, and the Eurozone's January harmonized CPI annual rate.
Gold / USD Gold prices declined yesterday, briefly falling below the $5,100 level, and are currently trading around $5,210. Profit-taking exerted some downward pressure on gold, while hawkish comments from Fed officials, which tempered expectations for interest rate cuts, were also a significant factor weighing on the precious metal. However, concerns over geopolitical tensions and trade uncertainties limited the extent of the decline. Attention today is on resistance near $5,300, with support around $5,100.
USD / JPY The USD/JPY pair advanced yesterday, breaking above the 156.00 level to reach a fresh 11-day high, and is currently trading around 155.70. Support stemmed from hawkish remarks by Fed officials that cooled expectations for near-term rate cuts. Additionally, reports of Japanese Prime Minister Taro Kono's opposition to further rate hikes contributed significantly to the pair's ascent. Market focus today is on resistance near 156.50, with support around 155.00.
USD / CAD The USD/CAD pair climbed yesterday, hitting a 12-day high, and is currently trading near 1.3680. The primary driver was a stronger US Dollar Index, buoyed by hawkish Fed commentary dampening rate cut expectations and supportive economic data. A retreat in crude oil prices and risk-off sentiment fueled by trade uncertainties also provided some support to the pair. Resistance near 1.3750 is eyed today, with support around 1.3600.
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