© Reuters. FILE PHOTO: Traffic signs are reflected on an electric board showing the Nikkei stock average outside a brokerage house in Tokyo, Japan, July 28, 2023. REUTERS/Kim Kyung-Hoon
By Chuck Mikolajczak
NEW YORK (Reuters) – The Japanese yen jumped on Thursday as Bank of Japan officials hinted the central bank could back away from its ultra-low interest rate plan and a gauge of global stocks rose after three straight declines as investors evaluated the latest round of US Labor Market Data.
The yen rose 2.39% against the dollar, its biggest one-day jump since Jan. 12, to 143.86 per dollar after Bank of Japan Governor Kazuo Ueda added to speculation that The central bank could move away from negative rates by saying that policy management “will be even more challenging starting at the end of the year and heading into next year” and indicated several options for what could be on the horizon.
The BOJ is the only central bank that has not begun to tighten policy. Meanwhile, central banks such as the US Federal Reserve and the European Central Bank (ECB) are considered to be nearing or at the end of their rate raising cycles.
“Last night's comments added fuel to bets on an eventual return to positive rate territory for the Bank of Japan,” said Karl Schamotta, chief market strategist at Corpay in Toronto.
The euro fell 0.50% to 103.62, while the euro rose 0.28% to $1.0792.
Markets see about a 21% chance that the Bank of Japan will raise rates at its last meeting of the year on December 19, according to LSEG data. Japanese government bonds also saw a sharp sell-off, with 10-year Japanese government bond yields rising 10.3 basis points, the most since July 28.
On Wall Street, U.S. stocks rose, led by a 3.22% gain in communication services stocks as Google parent Alphabet (NASDAQ ) rallied and the latest labor market data showed a rise in weekly unemployment claims.
After a series of data this week confirmed some weakening in the labor market, attention will turn to Friday's government payrolls report.
They rose 62.95 points, or 0.17%, to 36,117.38, gained 36.25 points, or 0.80%, to 4,585.59 and jumped 193.28 points, or 1.37%, to 14,339.99. .
European stocks closed lower as a recent rally stalled, with the index falling 0.27%, while MSCI's gauge of global stocks gained 0.48% and was on track for its first advance after three consecutive falls, their longest streak since late October.
Longer-dated U.S. Treasury yields were little changed after bouncing slightly from three-month lows ahead of the U.S. jobs report. The 10-year bond yield rose by last time 2 basis points to 4.144%.
Cooling economic data and recent comments from Federal Reserve officials, including Chairman Jerome Powell, have raised expectations that the U.S. central bank has ended its cycle of raising interest rates and will begin cut rates as soon as March.
While the market broadly believes the Federal Reserve will keep rates steady at its next policy meeting on December 12-13, expectations for a US rate cut of at least 25 basis points (bps) in March they are around 63%, according to CME's FedWatch tool. , up from about 43% a week ago.
Oil prices gave up early gains after a slight move higher and settled at a six-month low as investors worried about sluggish energy demand in the United States and China, while U.S. production remains near record highs.
fell 0.06% to $69.34 a barrel, while it closed at $74.05 a barrel, down 0.34% on the day.
