GBP/USD is the biggest loser, down 0.7% to 1.2120 levels at the moment. The pair is still poised to chase further downside with sellers targeting the 1.2000 level. The dollar is once again holding firmer in trading today, mostly rising against the euro and pound. It is down against the yen but keeping steady elsewhere.
This keeps the dollar’s post-NFP momentum going, particularly when compared to the euro and pound. Although it is still down 0.4%, EUR/USD has recovered to 1.0203 after briefly falling below 1.0200 to a low of 1.0176 earlier.
The second noteworthy mover is the USD/JPY pair, which is currently down 0.3% to 157.25 in Trading firm. Although it was primarily earlier in Asia, the peak earlier almost reached 158.00. Finding a balance between rising bond yields and a possible rate hike by the BOJ later this month is now the challenging aspect of the USD/JPY.
Today, 10-year Treasury rates increased once more to 4.796% for the former. Yields have not been that high since November 2023.
Regarding the BOJ, traders are still unable to make a verdict on the January decision without flipping a coin. The present pricing indicates a ~49% chance of a 25 bps rate hike and a ~51% chance of no change. Since the end of December, not much has changed in this regard.
Essentially, though, it expresses the belief that traders may still perceive the possibility of a BOJ “surprise” the next week. Nevertheless, anticipate “reports”—that is, BOJ leaks—prior to the decision, which will direct markets to adjust their sentiment pricing. Anytime between now and the beginning of next week maybe that.