11:08 AM EDT, 05/21/2024 (MT Newswires) -- The Japanese yen and some risky currencies rallied in North American trade on Tuesday as US government bond yields fell and financial markets appeared to shrug their shoulders at further hawkish commentary from Federal Reserve officials.

USD/JPY was quoted 0.19% lower at 156.10 after falling from 156.43 during early North American trade, making the Japanese yen the second best performing G10 currency behind only the Norwegian krone. Meanwhile, in the G20 group, a rally by the South African rand pushed USD/ZAR 0.64% lower to 18.04 while other currencies like the Indian rupee also climbed.

Price action coincided closely with a decline in front-end US government bond yields, which persisted even as somewhat hawkish remarks from the Fed's Christopher Waller and Raphael Bostic appeared to vindicate financial markets for betting that interest rate cuts are unlikely to come much before the final quarter.

Atlanta Fed President Bostic said inflation will decline only slowly from here and that he would not expect rates to be cut before the fourth quarter in an interview with Bloomberg Television. Meanwhile, Governor Waller told the Peterson Institute for International Economics that he would like to see "several more months of good inflation data" before voting to cut.

Rates implied by Fed Funds futures were not fully discounting an initial rate cut until November ahead of the remarks while the rate implied by the December contract was sitting at 4.98% on Tuesday, suggesting investors, traders and other market participants see only limited scope for any more than one rate cut to be announced this year.