Por Geoffrey Smith
Investing.com — The dollar tested a fresh nine-month low in early European trading on Tuesday, as economic data from Japan and the UK bolstered the case for further interest rate hikes. in those countries.
By 02:55 ET (0755 GMT), the , which tracks the greenback’s performance against other advanced economy currencies, was down 0.4% at 101.513 after reversing part of the day’s rise. earlier overnight. This decline is attributed to stronger-than-expected Japanese inflation numbers, adding to pressure on the Bank of Japan to abandon its policy of yield curve control.
Core inflation in Japan rose to 3.1% in December, its highest level in more than three decades, instead of staying at 2.9% as expected. On the other hand, the governor of the Bank of Japan, Haruhiko Kuroda, received criticism from his former colleagues, one of whom told the Nikkei newspaper that he was “taking the Japanese for fools” by allowing the yen to weaken. so much. Last week Kuroda had insisted that the decision made by the bank at its last meeting to keep the current policy setting unchanged had been the correct one.
Despite this, it improved another 0.6% to 129.81 as speculation mounted about a Bank of Japan tightening, as Kuroda is due to leave office in March and most analysts they hope the new governor will take a different approach.
In Europe, meanwhile, sterling also rose after new data uncovered a rise in government debt in December, reflecting the rising cost of keeping household and business energy bills in check. Public sector financing needs rose to £26.58bn net, some £4bn more than expected, mainly due to subsidy payments and an increase in the cost of servicing the Kingdom’s inflation-linked debt United. The country’s interest bill, at 17.3 billion pounds, was the highest monthly figure on record.
It rose 0.3% to $1.2406 as investors are convinced the Bank of England will have to maintain its current pace of interest rate hikes to reduce inflation.
The rest of the economic calendar for the day will likely be dominated by S&P Global Purchasing Managers’ Indices across Europe, where attention will turn to whether the Eurozone economy managed to avoid contracting earlier in the year. Good weather and falling gas prices have bolstered confidence that a recession, if it comes, will be short and shallow, as opposed to the harsh recession that seemed likely a year ago when Russia invaded Ukraine.
This positive evolution of gas prices has improved the confidence of German consumers for the fourth consecutive month in January, according to GfK, although it is somewhat lower than expected data. The euro rose 0.2% to settle at $1.0890.
On the other hand, futures continued to make new highs as the dollar weakened. As of 02:55 ET, gold was trading at $1,942.85 an ounce, up 0.7% on the day.