BoJ’s Ueda points to hike next week
Global markets were mostly weaker overnight after a broader sell-off hit sentiment, sparked by warnings of a potential rate hike in Japan next week.
Bank of Japan Governor Kazuo Ueda said, “We will review the pros and cons of raising the policy rate at the next Monetary Policy Meeting… adjustments should not be too late or too early.”
Japanese markets took the commentary as a clear sign of a rate hike next week, with the Japanese two-year bond yield jumping to 1.04% — the highest level since 2008.
The Japanese yen was stronger, with USD/JPY down 0.5%, while the yen also gained in other markets, with AUD/JPY falling from 15-month highs.
Global shares were hit by the news, while more economically sensitive markets like cryptocurrencies also fell.
Trump signals Fed chair pick, Aussie holds firm
President Donald Trump said he has chosen his nominee for the next Federal Reserve chair but stopped short of naming the candidate. He stressed that he expects the new chair to push for rate cuts.
Bloomberg reported that Kevin Hassett, head of the White House National Economic Council, is seen as the front runner. Treasury Secretary Scott Bessent, who has overseen the process, suggested last week that Trump could announce the decision before the Christmas holiday.
The build-up to the decision could drive more volatility in high-beta currencies such as AUD/USD.
The AUD/USD reversed overnight after nearing the topside of the recent trading range at 0.6600.
AUD buyers might target 0.6523 at the 50-day moving average and 0.6512 at the 21-day moving average.
China signals more stimulus
China’s manufacturing PMI from RatingDog fell into contraction at 49.9 in November, missing forecasts of 50.5 and slipping from 50.6 a month earlier. The official PMI also weakened to 49.2.
RatingDog noted that Beijing may roll out extra stimulus to keep growth on track, saying: “Given the need to sprint toward the annual 5% target, efforts on both supply and demand could be strengthened toward year-end. The PMI is expected to show only modest expansion in December.”
USD/CNH hit a thirteen-month low.
Traders are watching resistance at 7.0992 on the 21-day moving average and 7.1155 on the 50-day moving average as the next key resistance.
Japanese yen turns from lows
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 1 – 6 Dec
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
