Comparatively, overnight, markets were flat but bid up. Since the shift, the hourly time frame has seen the most significant jump. Asia’s volume is going up again, but that doesn’t mean it will keep going up on Friday when Wall Street is closed for the holiday.
Even though there wasn’t a new reason, the US PMIs and FOMC minutes led to a weaker dollar and a better mood about stocks, which carried over to the Asia-Pacific markets on Thursday. The US government bond markets were closed on Thursday, but FX futures traded. The 10-year yield went down 3bp to 3.67, which dragged down the dollar until the bulls came in. The markets still think that the Fed funds rate will be 55bp higher at the next meeting in December and will peak at 5.02% in May 2023, even though the meeting minutes from November 1–2 showed that officials might now raise rates in smaller chunks.
The minutes also highlighted that a slower pace of rate hikes would help the FOMC assess progress toward its goals, given monetary policy lags. Slowing rate hikes could decrease financial system risks, but others say it should wait for inflation to improve.
After falling 1.1% on Wednesday, the dollar index DXY fell 0.2% to 105.85 in Tokyo trade. The Fed has raised interest rates to levels not seen since 2008. However, US consumer price data that was lower than expected has led people to think that the Fed will raise rates more slowly in the future. In November, the US Dollar index fell 5.2%, making it the worst month in the past 12 years.
Stability in the financial markets seems to hurt the value of the Japanese Yen and help the USDJPY pair, at least for now. The lack of follow-through buying makes bullish traders think twice before getting ready for a significant recovery.