Dollar set for best week versus yen in three months after Powell speech
THE US dollar was on track for its best week against the yen in three months on Friday (Nov 10), after Federal Reserve Chair Jerome Powell and other officials said the central bank may have to hike rates again.
Fed policymakers, including Powell, said on Thursday they are not sure that interest rates are high enough to finish the battle with inflation. Investors saw the comments as hawkish, pushing bond yields and the dollar higher.
The dollar traded at 151.40 yen, not far off recent one-year highs. It was on track for a weekly gain of 1.39 per cent against the yen, its biggest increase since August.
“Powell’s speech was quite hawkish, and that just really hit sentiment,” said Tina Teng, market analyst at CMC Markets.
The yen’s weakness has kept traders on alert for signs the Japanese government will intervene to support the currency. Authorities intervened twice last year in response to a slump in the yen.
“It does raise the risk of the BOJ stepping into the (forex) market to strengthen the yen, but I think markets are expecting no intervention unless dollar/yen moves to about 152,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
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The dollar index, which tracks the currency against six major peers, was a touch softer at 105.81 on Friday. It was on track to gain 0.7 per cent this week, and set for its biggest weekly rally since Sept.10.
The dollar dropped last week when the Federal Reserve held interest rates steady at 5.25 per cent to 5.5 per cent and some weaker-than-expected US economic data weighed on Treasury yields.
Meanwhile, the euro edged higher and was last trading at US$1.0683, after falling 0.4 per cent on Thursday.
European Central Bank interest rates kept at a record high for long enough could return inflation to the bank’s 2 per cent target, ECB President Christine Lagarde said on Friday.
Sterling was steady at around US$1.2219, after data showed the UK economy stagnated in the third quarter.
Bitcoin, the world’s largest cryptocurrency, held near an 18-month high and last bought US$36,075, having peaked at US$37,978 in the previous session, its highest level since May 2022.
Prices of the digital assets have surged after speculation of an imminent approval of BlackRock’s spot bitcoin ETF, with the asset management giant also having registered to create an ethereum trust.
A spot crypto ETF would make the sector “more accessible for institutional investors to enter the crypto space, likely boosting demand and subsequently prices,” said Carl Szantyr, managing partner of digital asset hedge fund Blockstone Capital.
The Norwegian crown jumped after data showed Norway’s inflation was stronger than expected in October, boosting market rate hike expectations.
The dollar was last down 0.9 per cent at 11.127 crowns to the dollar. REUTERS
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