Wednesday witnessed the USD stable at a thirty-two-year range against the Yen. That followed its two-week trough of other currencies leading to their slump. Meanwhile, Sterling begins to pick up momentum for the upside.
Dollar Firm Against The Yen
So far this year, the US Federal Reserve has exhibited aggression towards inflation. While rising prices continue to bite the economy, Fed maintained its poise to curb the situation. Given its hawkish stand, the Dollar responded aggressively by throwing top currencies into a frenzy.
For two consecutive weeks, the Dollar threw a feat by strengthening against other currencies. Consequently, pressuring these greenbacks into a prolonged selloff. The Yen found itself in a sudden debacle that prompted the Japanese government to intervene.
Meanwhile, the Sterling regained amid its trading session this week after BoE announced halting gilt sales. Further, the Bank of England debunked a report by the Financial times. According to the statement, the bank sought to put off quantitative tightening.
Furthermore, the Euro fell from a two-week high. During the Asian trading session, the USD climbed to 149.395 per Yen, its highest since 1990. Afterward, it dropped to 149.305.
Currently, investors are anxiously watching as the currencies would play out. Traders expect the Ministry of Finance and Bank of Japan to step in again if it breaks the 150 level. Last month, BoJ intervened in the currency market to save the Yen after hitting 145 per USD.
Japan Forays The Currency Market To Buyout The Yen
It is worth noting that this was its first intervention since 1998. In a report by local media, Shinuchi Suzuki, Japan’s Finance Minister, said he is watching the currency closely. Suzuki added that the government would show up if the situation demanded immediate attention.
A look into the USD futures saw it rise by 0.2 percent to 112.19. Meanwhile, on October 6, the index was trading at its lowest of 111.76. However, it touched a decade-high of 114.78 in September.
Notably, the index measures the Dollar against major currencies such as the Sterling, Euro, and Yen. The Dollar provides a safe-haven to investors, but it has slumped this week. Equities’ bearish action contributed to its decline.
Fortunately, investors expect more rate hikes from Fed after the inflation report showed it soared. The main expectation is for the Federal Reserve to increase rates by 75 basis points. With this, the USD will gain further upside support.
Meanwhile, economists fear continuous rate raises would push the economy into a recession. Also, the UK’s inconsistent fiscal scheme is ruining the global market outlook.
Sean Callow, a Westpac currency strategist, asserted odds are the Dollar’s explosion is not over. Sean said the USD would likely revisit September’s high in November. He added that the Yen would probably require another intervention, especially after Suzuki cleared up speculations.
The Sterling lost 0.34 percent to $1.1318 during the last trading session.
