The currency reacts to the possible rate cut by the Fed, while the Japanese currency strengthens after weeks of weakness.
He global dollar was quoted lower this Friday after the significant fall recorded on Thursday following the data of the slowdown of the inflation in USAwhich also dragged down the currency in the local exchange market.
He dollar indexwhich compares the greenback to a basket of six major currencies, fell 0.24% to 104.09 units, very close to the one-month low of 104.07 touched the day before. Meanwhile, the dollar in Uruguay closed higher after a week with ups and downs.
In the global currency market, the euro rose 0.36% to $1.0904, while the pound sterling appreciated 0.59% to $1.2985. Meanwhile, the dollar fell 0.56% against its Japanese counterpart, to 157.3 yen, after trading at 157.3, its lowest level since June 17.
The yen’s rally against the dollar
The rally in the Japanese currency, which has been languishing around 38-year lows, began on Thursday, just after a drop in consumer prices was reported in USA in June, raising the likelihood that the Federal Reserve lower the interest rate in September.
On Friday, the move came after the producer prices in the United States rose moderately in June.
Data from daily operations of the Bank of Japan Friday’s data suggested the bank spent between 3.37 trillion yen and 3.57 trillion yen ($21.18 billion to $22 billion) buying its currency the day before, less than three months after its last foray into the market.
James Malcolm, head of currency strategy at UBS in London, said Friday’s move may have been the result of intervention or rate-checking.
The Bank of Japan sometimes calls traders to ask about rate levels, which can signal possible intervention and itself triggers market moves.
“They need to change tactics to keep the market on edge and show that they are serious. It seems that yesterday was not difficult for them. So this may ensure that we close the week near the lows, which will put more technical pressure on the cross,” Malcolm said.
Source: Ambito
