The Japanese yen hovered near the critical 155 per dollar level, a threshold that many market participants view as a potential trigger for intervention by Japanese authorities. This development places the yen in close proximity to a key point, where fluctuations could prompt a verbal response from the Bank of Japan. Japan’s currency chief, Atsushi Mimura, remarked last week that officials “are prepared to take appropriate actions if necessary” to address excessive market movements.
Meanwhile, the U.S. dollar index—which tracks the greenback against a basket of six major currencies, including the yen and euro—stood at 105.92, approaching its recent peak of 106.17, a level not seen since May 1. The dollar’s strength comes as traders adjust their expectations regarding U.S. monetary policy. According to the CME Group’s FedWatch Tool, there is now a 60% chance that the Federal Reserve will reduce interest rates by 25 basis points at its December 18 meeting, a drop from the 77% probability recorded just a week earlier.
The upcoming release of the U.S. consumer price index (CPI) later today could further impact those odds. Analysts are predicting a 0.3% rise in the core CPI, and a stronger-than-expected inflation reading could dampen expectations of an imminent rate cut.
In the foreign exchange market, the euro fell to a one-year low, trading at $1.0625 after briefly dipping to $1.0595 overnight. The currency’s weakness is attributed to economic pressures from ongoing trade tensions, particularly those stemming from U.S. tariffs. Europe, much like China, has been seen as vulnerable to the impact of U.S. trade policies, with President Trump previously stating that the EU would “pay a big price” for not purchasing enough American goods.
Commodities also faced headwinds. Copper prices slumped 2% to a two-month low on the London Metal Exchange, reflecting concerns over global demand, especially from China. Similarly, oil prices remained subdued, with OPEC reducing its global oil demand growth forecast for this year and next, citing ongoing weaknesses in China and other regions. Brent crude edged up 0.2% to $72 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 0.2% to $68.26, remaining close to Tuesday’s lows—the weakest levels since late October.
Gold saw a modest rebound, rising 0.4% to $2,607 per ounce after hitting a near two-month low of $2,589.59 in the previous session. The precious metal had been pressured by the dollar’s strength but found some support amid broader market uncertainties.
The currency and commodity markets remain highly sensitive to both geopolitical developments and economic data, with traders closely monitoring the Federal Reserve’s next moves and global trade dynamics.
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