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The FOREX-Yen falls as traders look at new US sanctions and CPI data

The FOREX-Yen falls as traders look at new US sanctions and CPI data

The dollar was higher against the Japanese yen as traders awaited the delayed release on Friday of U.S. consumer price inflation data and considered the new U.S. sanctions imposed on Russian oil companies that boosted oil prices.

The U.S. Dollar Index, which measures the greenback in relation to a basket, was almost flat last week at 98.925.

The main focus of the week is on the release of inflation data despite the U.S. government shutdown. This will help the U.S. Social Security Administration calculate its annual cost-of living adjustment for 2026.

The Federal Reserve will closely monitor the numbers, even though its policy focus has shifted away from inflation and towards the U.S. labour market.

The data will be important for slightly different reasons than normal. Nick Rees is the head of macro-analysis at Monex Europe.

YEN SLIDE - YEN ON SLIDE

The new U.S. sanctions against major Russian suppliers Rosneft, and Lukoil for Russia's involvement in the war in Ukraine have sent oil prices up by nearly 5%. This follows British sanctions last week on these two companies.

The U.S. Treasury Department announced that it was ready to take additional action, as it called upon Moscow to immediately agree to a ceasefire.

Several trade sources reported that Chinese state oil companies had stopped buying seaborne Russian crude oil from two companies. This boosted prices.

Marc Chandler, Bannockburn Capital Markets' chief market strategist, stated that the new sanctions had a negative impact on the yen and other currencies linked to oil imports.

He said that Japan is a large oil importer and that higher oil prices are hurtful.

The yen was also affected by domestic factors. It was headed back to last week's seven month low of 153.29 per dollar. This was the level it reached this week, after Sanae Takaichi was selected as Japan's new ruling party leader. Takaichi is widely considered a fiscal dove and a monetary dove.

The market is eagerly awaiting the details of Takaichi's stimulus package now that he is in office as Prime Minister.

Yutaka Miura is a senior technical analyst with Mizuho Securities. He said that buying based on the hopes of a Takaichi-led government had already reached its end.

The market has reached a stage where it must assess the feasibility of concrete policies.

OIL PRICE RISE

The Norwegian crown appreciated on Thursday due to the increase in oil prices.

The dollar fell 0.42% against the Norwegian crowns at 9.9717, dropping below the 10-crown mark for the first two weeks. Meanwhile, the euro reached a new low of 11.568 crowns in a month.

Sterling was also down 0.25% to $1.332, having recovered from its recent fall. This was due to weaker than expected consumer inflation data which caused the markets' bets for another Bank of England rate reduction this year.

The euro rose 0.06% to $1.162.

The Swiss National Bank published its first meeting minutes on Monday. It did not move the Swiss Franc. It was at 0.7949 to the dollar. Hannah Lang reported from New York, with additional reporting from Alun John and Kevin Buckland in London; editing by Jacqueline Wong and Kim Coghill; Barbara Lewis, Alison Williams, and Diane Craft.

(source: Reuters)