He dollar rose on Monday against and in to a nearly 11-month high following last week’s gains, keeping traders focused on the risks of currency intervention in Japan.
He and in fell 0.17% to 148.66 per dollar, hitting its lowest since late October and adding to Friday’s declines after the Bank of Japan kept interest rates ultra-low, while Governor Kazuo Ueda stressed the need to spend more time evaluating the data before raising the cost of credit.
The Japanese currency remained close to 150 units per dollar, a level that some market observers considered as a line that would provoke an intervention in the currency market by the Japanese authorities similar to that of last year.
“According to Bank of Japan Governor Kazuo Ueda, there was still no sign of sustainably stable inflation, so the BoJ will patiently continue monetary easing in the current framework. This was a clear brake on the yen,” said Esther Reichelt, currency analyst at Commerzbank.
Many would consider that a excessive rise of the yen would catalyze new interventions to strengthen the Japanese currency, just like last year. “It is possible, of course, that precisely this fear of interventions has prevented for now a weaker yen“Reichelt added.
Dollar in the world: the Fed will continue raising rates
The index dollar, which hit more than six-month highs on Friday, gained a minimal 0.06% to 105.64.
Last week, the Federal Reserve held interest rates at its monetary policy meeting, but surprised markets by signaling that US rates would have to stay higher for longer than expected.
On Friday, Fed officials warned of new rate increases. Markets now see a 25% chance of a 25 basis point hike in November.
Meanwhile, the euro It was down 0.1% at $1.0633, approaching Friday’s six-month low of $1.0615. The single currency was on track to lose around 1.9% for the month, its biggest monthly drop since May, amid growing recession fears.
The pound sterling It fell 0.17% to $1.2224, after falling more than 1% last week due to the Bank of England’s pause in its rate hike cycle. It was heading for a drop of 3.5% in September, its worst monthly result in a year.
Source: Ambito
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