FOREX-Yen gains before Powell speech, Aussie jumps

BY Reuters | ECONOMIC | 11/29/22 03:22 PM EST

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      Graphic: World FX rates https://tmsnrt.rs/2RBWI5E



 (Recasts with Fed speech, adds data, details, updates prices)
    By Karen Brettell
       NEW YORK, Nov 29 (Reuters) - The greenback edged lower
against the Japanese yen on Tuesday with Federal Reserve
chairman Jerome Powell due to speak on Wednesday, while the
Aussie dollar jumped as sentiment improved on hopes that China
would reopen from COVID shutdowns.
    Powell's comments will be evaluated for any new signs of
hawkishness, with key jobs data for November due on Friday.
    The dollar index has fallen to 106.82 from a 20-year
high of 114.78 on Sept. 28 as investors look toward the U.S.
central bank reaching a peak rate early next year with inflation
pressures expected to subside.
    "We had a sizable reversal in the dollar since the October
CPI report, so that's probably a symptom of Fed tightening
fading as a force of dollar support as markets increasingly look
for peak Fed policy early next year," said Vassili Serebriakov,
FX strategist at UBS in New York.
    The U.S. central bank is expected to hike rates by an
additional 50 basis points when it meets on Dec. 13-14, though
the odds of a 75-basis-point increase have risen over the past
several weeks and now stand at a 37% probability.
    Traders are pricing for the Fed funds rate to peak at 5.01%
in June, before falling back to 4.64% by December 2023.

    The euro fell 0.15% against the U.S. currency to
$1.0324. The greenback dipped 0.15% to 138.69 Japanese yen
.
    Moves in dollar/yen are highly correlated to U.S. interest
rate policy and the Japanese currency has benefited as investors
pare back expectations for further aggressive U.S. rate hikes.
    Data on Tuesday showed that U.S. consumer confidence slipped
to a four-month low in November, with households less keen to
spend on big-ticket items over the next six months amid high
inflation and rising borrowing costs.
    A separate report on Tuesday showed the S&P CoreLogic
Case-Shiller national home price index rose 10.6% on a
year-on-year basis in September, slowing from August's increase
of 12.9%.
    The Aussie jumped after health officials said that China
will speed up COVID-19 vaccinations for elderly people, aiming
to overcome a key stumbling block in efforts to ease unpopular
"zero-COVID" curbs.
    Risk appetite had worsened on Monday after protesters and
police clashed over the stringent COVID restrictions.
    Chinese authorities have begun inquiries into some of the
people who gathered at weekend protests as police remained out
in numbers on the city's streets.
    The risk-sensitive Aussie dollar, which is strongly
tied to Chinese growth, gained 0.46% to $0.6684.
    The offshore yuan also rose against the dollar to
7.1445.
    Euro zone inflation data due on Wednesday is also in focus
after figures showed inflation in Spain and Germany came in
below expectations.
    European Central Bank President Christine Lagarde said on
Monday euro zone inflation had not peaked and it risked turning
out even higher than currently expected, hinting at a series of
interest rate hikes ahead.
    ========================================================
    Currency bid prices at 3:06PM (2006 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change
                                              Session
 Dollar index                 106.8200       106.6200    +0.21%         11.663%       +106.8600   +106.0500
 Euro/Dollar                  $1.0324        $1.0340     -0.15%         -9.18%        +$1.0395    +$1.0323
 Dollar/Yen                   138.6850       138.9050    -0.15%         +20.48%       +139.3450   +137.8900
 Euro/Yen                     143.18         143.64      -0.32%         +9.87%        +144.0200   +143.0200
 Dollar/Swiss                 0.9540         0.9489      +0.55%         +4.60%        +0.9544     +0.9461
 Sterling/Dollar              $1.1946        $1.1958     -0.09%         -11.66%       +$1.2063    +$1.1946
 Dollar/Canadian              1.3584         1.3496      +0.69%         +7.47%        +1.3645     +1.3409
 Aussie/Dollar                $0.6684        $0.6653     +0.46%         -8.05%        +$0.6749    +$0.6641
 Euro/Swiss                   0.9847         0.9811      +0.37%         -5.03%        +0.9871     +0.9814
 Euro/Sterling                0.8639         0.8647      -0.09%         +2.85%        +0.8652     +0.8608
 NZ                           $0.6193        $0.6161     +0.54%         -9.51%        +$0.6253    +$0.6162
 Dollar/Dollar
 Dollar/Norway                10.0145        10.0315     -0.27%         +13.56%       +10.0215    +9.9395
 Euro/Norway                  10.3427        10.3508     -0.08%         +3.29%        +10.3730    +10.3045
 Dollar/Sweden                10.5900        10.5539     +0.22%         +17.43%       +10.5950    +10.4797
 Euro/Sweden                  10.9292        10.9054     +0.22%         +6.79%        +10.9388    +10.8826
 (Additional reporting by Joice Alves in London; editing by Mark
Heinrich)

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Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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