Yen slips to 157.73 as five central banks set to move rates this week
The yen weakened 0.16% to 157.73 per dollar on Tuesday, surrendering more of last week's safe-haven gains as a risk-on mood returned to markets and five major central banks prepared to set policy within days.
The Bank of Japan concludes a two-day meeting on Friday and is expected to hold rates at 1.25%, while signalling it is ready to keep raising borrowing costs. A gauge of Japan's service-sector inflation rose 3.7% year on year in September, data showed on Tuesday, a sign of price pressure that analysts at MUFG said leaves the underlying inflation rate broadly consistent with the 2% target. MUFG added that simply touching the target once is not enough, and that the BOJ will now watch risks in both directions rather than only to the downside.
Markets price slightly better-than-even odds of a December hike, leaving room for a yen rebound if Governor Ueda strikes a hawkish tone, Ebury analysts said in a note. Ebury said it still favoured another hike at the last meeting of the year, though whether the BOJ would be prepared to commit to that just yet was unclear.
The dollar index held near a one-week high at 102.04, helped by a tech-led rebound on Wall Street after Anthropic's IPO filing and Meta's $95 billion equity plan revived the artificial intelligence trade. The euro fell to a near two-week low of $1.1165, down about 1.4% this month, as a selloff in French government bonds pushed the country's debt-risk premium to its highest since the 2011 sovereign debt crisis.
The Federal Reserve is seen holding rates at its meeting concluding on Wednesday, the European Central Bank is expected to keep rates at 2.5% on Thursday, and New Zealand's and Canada's central banks are expected to raise rates this week. The Brazilian real steadied after falling sharply when President Luiz Inacio Lula da Silva won a fourth term on Sunday against Senator Flavio Bolsonaro.
