Dollar eases, yen finds floor from Tokyo’s jawboning By Reuters

© Reuters. FILE PHOTO: The Japanese yen and the US dollar are seen with a currency exchange diagram in this photo taken June 16, 2022. REUTERS/Florence Lo/Illustration/File

It’s Rae Wee

SINGAPORE (Reuters) – The dollar was on the back foot on Tuesday, due to profit-taking and pressured on the other side by a slightly stronger yen as Japanese government officials remained tight-lipped in efforts to protect the currency.

Against the greenback, the New Zealand dollar also fell from a four-month low and last rose 0.13% to $0.6011, the same reason for the high that confirmed 0.1% to $1.2649, far from last month’s $1.25755.

With a thin economic calendar for the week, the market is focused on the Federal Reserve’s release of a more accommodative rate hike on Friday, which could steer the path of US interest rates.

The US core personal consumption expenditures (PCE) index is seen rising 0.3% in February, which would keep the annual pace at 2.8%.

“The Fed chair has tried to push the market away from strong interest rates earlier this year and has maintained the view that it will be difficult,” said Tony Sycamore, market analyst at IG.

“But a print of 3% (annually) or more would raise concerns that the recession may be more difficult than expected.”

A shift in global sentiment after a flurry of central bank meetings last week sent the dollar to a one-month high against its major peers.

While the Fed is still on track for three rate cuts this year, other central banks have also signaled that the move is underway.

“It’s difficult for (the dollar) to continue any weakness as US growth continues to expand globally,” said Thierry Wizman, global FX and analyst at Macquarie. “But it’s very difficult for (the dollar) to weaken when other central banks were sounding like the Fed.

Fed officials on Monday acknowledged increased caution on rising inflation in the world’s largest economy.

It was last 0.08% lower at 104.14, while the euro rose 0.08% to $1.08465.

it rose $0.6541.

In Japan, the greenback fell 0.02% against the yen to 151.385, facing strong resistance near the 152 level due to threats from the Japanese authorities.

Japanese Finance Minister Shunichi Suzuki on Tuesday said he would not rule out any measures to counter the yen’s weakness, echoing a warning from Tokyo’s top diplomat yesterday.

The yen has fallen more than 1% since the Bank of Japan (BOJ) hiked last week, as traders continue to focus on interest rate differentials between Japan and the rest of the world, particularly the United States.

Local officials are increasingly vocal about their displeasure at the cutbacks, as they are set to drop in 2022.

“Even if they say the basics don’t justify the price, the market is telling them something else,” said IG’s Sycamore.

The yuan, which has been on traders’ radars especially since its sudden fall last Friday, was little changed at 7.2182 per dollar in the local market, despite a stronger-than-expected revision from the People’s Bank of China.

They rose 0.1% to 7.2446 per dollar.

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