Japanese Yen Higher On Fed Tightening Worries

The Japanese yen appreciated against its key counterparts in the European session on Monday, as concerns over faster Fed rate hikes and a surge in Covid-19 cases improved demand for safe-haven assets.

International Monetary Fund warned that faster rate increases create risks to global recovery and emerging economies should plan for potential bouts of economic turbulence.

Goldman Sachs predicts at least four rate hikes this year versus the previous projections of three times.

U.S. consumer inflation data is due on Wednesday, which is expected to reach a four-decade high of 7 percent in December.

Fed Chair Jerome Powell will testify before the Senate Banking Committee on Tuesday on his nomination for the post.

Data from Johns Hopkins University showed that global infections topped 307 million due to the spread of the Omicron variant of Covid-19.

The yen firmed to a 1-week high 115.18 against the greenback, 6-day high of 130.36 versus the euro and more than a 2-week high of 77.81 against the kiwi, up from its early low of 115.85, 4-day lows of 131.37 and 78.52, respectively. The yen may find resistance around 112.00 against the greenback, 128.5 versus the euro and 76.00 against the kiwi.

The yen edged up to 90.96 against the loonie and 82.64 versus the aussie, following its previous 2-month low of 91.70 and a 4-day low of 83.36, respectively. The yen is seen challenging resistance around 88.00 against the loonie and 80.00 versus the aussie.

The yen touched a 4-day high of 156.29 against the pound and a 2-week high of 124.67 against the franc, rising from its prior 4-day lows of 157.38 and 125.91, respectively. The yen is poised to test resistance around 154.00 against the pound and 122.00 against the franc.

Looking ahead, U.S. wholesale inventories for November will be published in the New York session.