The Japanese yen showed a slight recovery on Wednesday, rising 0.12% to 156.69 after a three-day decline under pressure from global interest rate differentials. The yen had fallen 0.6% towards 157 in the previous session. However, the currency is still trading near the record low of 182.64 recorded against the euro yesterday.
Alex Hill of Electus Financial stated that the weakness in the yen is “currently an easy target for the market.” According to Hill, rising long-term US Treasury yields and concerns about growth and fiscal policy in Japan continue to put pressure on the currency.
Hill stated that the yen “could weaken further towards the new year” against the New Zealand and Australian dollars.BOJ EXPECTED TO HIKE INTEREST RATES
The Bank of Japan (BOJ) is almost certain to raise interest rates next week. Markets will be closely watching messages, especially from Governor Kazuo Ueda, regarding his policy path. Possible expansionary fiscal measures in Japan further complicate the BOJ’s position, which already boasts one of the lowest interest rates in the world. In this environment, investors are reporting an increase in buying in the euro/yen and Aussie/yen pairs.EYES ON THE FED DECISION
The main focus of global markets is the decision of the US Federal Reserve (Fed) to be announced today. While investors are expecting a fully priced-in 25 basis point interest rate cut, Federal Reserve Chairman Jerome Powell’s messages and projections for 2026 are being closely watched. Kevin Thozet of Carmignac stated that the Fed has its “most divided” structure in the last five years, with six members favoring easing and six members favoring keeping rates stable. According to Thozet, Powell may use tougher rhetoric to appease the hawks when making the expected interest rate cut. […] […] […] Recent data from the US showed a slight increase in job postings in October, and the perception of continued economic resilience led to the exclusion of aggressive interest rate cuts for 2026 from expectations.] […] […] […] […] EURO SUPPORTED BY INTEREST RATE OUTLOOK] […] […] […] The Euro rose 0.23% to $1.1654 as the spread between its US Treasury yields and the Euro increased investor interest. ECB member Isabel Schnabel’s statement that “an interest rate hike is more likely than a cut” has caused investors to completely erase expectations of an interest rate cut in 2026 and to price in a more than 50% probability of an interest rate hike in the first quarter of 2027.
Markets are also monitoring the EU financing plan for Ukraine and Europe’s support for it, which is approaching a qualified majority.
In other currencies, the Australian dollar traded at $0.6652 after reaching a near three-month high following hawkish statements from RBA Governor Michele Bullock.
