Dollar starts week with rise in yen falls on Asia FX
2023.02.13 01:44
Dollar starts week with rise in yen falls on Asia FX
By Tiffany Smith
Budrigannews.com – On Monday, investors increased their bets on the Federal Reserve keeping monetary policy tighter while waiting for a U.S. consumer price report to be released the following day. As a result, the dollar edged closer to a five-week high against major peers.
The Japanese government was scheduled to nominate a candidate on Tuesday who supports the current policy settings as the new central bank governor, causing the yen to plummet.
Due to concerns that higher U.S. rates will stifle growth, the risk-sensitive Australian and New Zealand dollars eased in tandem with Asian stocks. Sterling fell as well.
Shinichiro Kadota, senior FX strategist at Barclays (LON:), stated, “The dollar has been well supported since the much-stronger-than-expected U.S. jobs data earlier this month, and Fed comments have leaned more to the hawkish side, but of course the focus is tomorrow’s CPI.” in Japan.
“I believe the market is more concerned about inflation upside risks than downside risks,”
Revisions to the previous data set revealed that consumer prices increased in December rather than falling as anticipated prior to Tuesday’s CPI report.
Separately, surveys conducted by the University of Michigan indicated an inflation outlook for one year of 4.2%, which was higher than the final number in January. The Michigan survey is one of the indicators that the United States central bank monitors, according to Fed Chair Jerome Powell.
Compared to the current target rate of 4.5-4.75%, money markets are positioned for a peak in U.S. interest rates around July.
The, which compares the dollar to six other currencies, including the yen, euro, and sterling, gained 0.068% to 103.65, remaining close to the highest level since January 6—103.96—on Tuesday.
The value of the dollar increased by 0.6% to 132.20 yen.
On Friday, sources indicated that Kazuo Ueda, a former board member of the Bank of Japan, would be the next governor. Ueda stated in an interview the same day that the BOJ should continue its ultra-easy policy.
According to Naka Matsuzawa, chief strategist at Nomura in Tokyo, “Markets are starting to understand that the new governor won’t be as hawkish as (investors’ initial thought).”
According to Matsuzawa, “His stance on the current policy is more balanced, or a bit dovish,” which will maintain the weak yen.
The euro dropped by 0.09 percent to $1.06685 before previously reaching $1.0656 for the first time since January 9. Today, sterling was trading at $1.20475, down 1%.
The dropped by 0.09% to $0.6912, while the one in New Zealand dropped by 0.11% to $0.6304.
