The USD is little changed with all the major currencies within 0.12% of the closing level from yesterday. The high to low trading ranges are also confined.
- EURUSD: 38 pips
- USDJPY: 30 pips
- GBPUSD: 40 pips
- USDCHF: 18 pips
- USDCAD: 33 pips
- AUDUSD: 35 pips
- NZDUSD: 40 pips
Looking at the 3 major currency pairs – the EURUSD, USDJPY and GBPUSD – the prices are all within 0.04% of unchanged on day with modest trading ranges of less than 40 pips in each.
Overnight, the Bank of Japan delivered another rate increase:
- BOJ raised rates 25 basis points to 1.00%
- Highest policy rate in more than 30 years
The Bank of Japan raised its policy rate by 25 basis points to 1.0%, the highest level since 1995, while signaling that additional rate hikes remain possible as inflation pressures build. The BOJ said Japan’s economy is evolving largely as expected, with the risk of a significant slowdown diminishing and inflation projected to run clearly above its 2% target. Policymakers highlighted the faster-than-expected pass-through of higher oil prices into consumer prices and warned of upside inflation risks. At the same time, the BOJ announced it will pause its bond purchase tapering program from April 2027, fixing monthly JGB purchases at around ¥2 trillion. While the move to higher rates is clearly hawkish, the decision to halt further tapering may help limit upward pressure on long-term yields. Overall, the message was that policy is still moving toward further tightening
Despite the rise, the pair remains above the 160.00 level
The Reserve Bank of Australia also six latest interest-rate decision, decided to leave left its cash rate unchanged at 4.35%, as expected, with a unanimous decision. The RBA stressed that both headline and underlying inflation remain too high, while uncertainty around the economic outlook remains elevated, particularly due to ongoing Middle East tensions and their impact on global energy prices.
The central bank warned that higher oil prices could keep inflation elevated for longer and said it remains focused on preventing those pressures from becoming embedded in the economy. While the statement retained a hawkish tone, some of the stronger inflation language from May was softened, suggesting the RBA is unlikely to raise rates again anytime soon but is also not close to considering rate cuts. The Australian dollar showed little reaction, with AUDUSD holding near 0.7050 after the decision.
In the Middle East, President Trump stated that the Strait of Hormuz should be fully reopened by Friday, coinciding with a planned signing ceremony in Switzerland between U.S. and Iranian officials. However, reports suggest that restoring normal shipping operations could take longer, with some estimates pointing to as much as two weeks before full capacity returns.
Key elements reportedly included in the framework agreement:
- Extension of the current ceasefire by 60 days
- Reopening of the Strait of Hormuz
- Removal of the U.S. blockade on Iranian ports
- Gradual normalization of energy exports
Markets remain sensitive to any signs that negotiations could encounter obstacles. An interesting side note Israel Hayom US Pres. Trump is considering firing senior officials who opposed the nuclear agreement with Iran including war Sec. Pete Hegseth and CIA director John Ratcliff. HMMMM. I am not sure that will happen, but it is interesting.
The major US indices are continuing to move higher with the Dow industrial average yesterday trading in closing at a new all-time high. The futures are planning a 88 point gain in the Dow 30 this morning. The S&P futures are implying a gain of 8.21 points. The NASDAQ futures are implying a gain of 67 points. Shares of SpaceX continue their run to the upside was shares currently training over $200 but off premarket highs. The current prices trading at $202.71 up 5.28% on the data
in the US that market, yields are lower:
- 2 year yield 4.0558%, -0.8 basis points.
- 5 year yield 4.166%, -1.9 basis points
- 10 year yield 4.445%, -2.3 basis points
- 30 year yield 4.945%, -2.4 basis points.
In other markets:
- Crude oil is trading down close to three dollars at $77.82 and near the low for the day
The USD is little changed vs the EUR, JPY and GBP. Bank of Japan raises rates.
