The yen resumed its slow decline against the dollar on Monday after volatile trading last week, while investors weighed the odds of a deep Fed rate cut next month ahead of a slew of U.S. economic data.
The respite follows a tumultuous week that began with a massive sell-off across currencies and stock markets, driven by worries over the U.S. economy and the Bank of Japan’s hawkishness.
Last week ended calmer, with Thursday’s stronger-than-expected U.S. jobs data leading markets to pare bets for Federal Reserve interest rate cuts this year.
“If global investor risk sentiment continues to improve in the week ahead, it is likely that market expectations for Fed rate cuts will continue to be scaled back,” currency analysts at MUFG said in a note.
Still, investors are pricing 100 basis points of Fed cuts by year-end, according to the CME Group’s FedWatch tool, and U.S. producer and consumer prices numbers …