Dollar strengthened against yen after collapse
2022.12.28 01:19
Dollar strengthened against yen after collapse
Budrigannews.com – Higher Treasury yields and hopes for a strong rebound in Chinese growth as COVID-19 curbs loosen helped propel the dollar to a higher level against the yen on Wednesday, more than a week after it had reached its highest level.
The Bank of Japan’s further indications that a surprise policy change last week was not the beginning of a halt to stimulus also contributed to the yen’s decline.
In Asian trading, the dollar gained 0.5 percent to 134.17 yen. It had previously touched 134.40 for the first time since December 20, when the BOJ sent the pair plunging with an unexpected loosening of the 10-year Japanese government bond yield policy band.
On that day, traders speculated about an eventual withdrawal of stimulus, causing the yen to fall as low as 130.58 yen for the first time since the beginning of August.
However, a summary of the meeting’s opinions, which was made public on Wednesday, showed that policymakers were in favor of maintaining an ultra-accommodative policy, even though they were talking about growing chances that the country could see higher wage growth and sustained inflation next year.
Osamu Takashima, head of G10 FX strategy at Citigroup (NYSE:), stated, “It basically confirmed that the BOJ surprise from last week was a one-off, but from a longer-term viewpoint, nobody believes it.” Japan’s global markets anticipate that the dollar-yen will fall below 130 in the second half of the coming year.
“In any case, in the close to term, dollar-yen is returning quickly,” he said. ” “These hopes have stongly lifted bond yields, buoying the dollar-yen,” he added, “and the market is expecting a solid recovery in the Chinese economy at this time.”
In Tokyo, the, which typically has a high correlation with the dollar-yen pair, was at 3.8506%, not far from the overnight high of 3.862%, which was 1 1/2 months old.
On the crosses, Japan’s currency was also weaker. The euro rose 0.51 percent to 142.70 yen, also a one-week high. The Australian dollar reached a new one-week high of 90.40 yen, up 0.62 percent.
The, which compares the dollar to six other currencies, including the yen and the euro, rose 0.1 percent to 104.31, continuing its consolidation after falling to 103.44 on December 14, the day the Federal Reserve slowed interest rate increases to a half-point pace.
However, since then, Fed officials, including Chair Jerome Powell, have stressed that policy tightening will continue with a higher terminal rate, which has fueled concerns of a U.S. slowdown.
State Street branch manager Bart Wakabayashi said, “The dollar is in a very interesting situation.” in Japan.
He stated, “The Fed will have to cut rates if we have a recession in the United States, and obviously you will want to sell the dollar.” Simultaneously, on the off chance that there’s a worldwide downturn, individuals will purchase the dollar as a safe house. As a result, the dollar is in a bit of a bind, and you need to be very careful about which currency you buy or sell against.”
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The euro was steady at $1.0636, just below the six-month high of $1.0737 set on December 15, when Christine Lagarde, president of the European Central Bank, emphasized that rate hikes would need to continue.
Sterling decreased by 0.15 percent to $1.2013, remaining just above its December 22 low of $1.1993.
The Australian dollar gained 0.07 percent to $0.6738, moving closer to the upper end of its trading range since December 16.
