The yen rose to a three-week high against the dollar on Monday as Federal Reserve Chair Jerome Powell’s emphatic dovish shift contrasted sharply with Bank of Japan chief Kazuo Ueda’s steadfastly hawkish tone.
The U.S. currency hovered near its lowest in 13 months against the euro. It also sagged closer to levels last seen in March 2022 versus sterling, with Bank of England head Andrew Bailey’s comments that it was “too early to declare victory” over inflation signaling a less aggressive stance on interest rate cuts than the Fed.
The dollar sank as much 0.59% to 143.56 yen for the first time since Aug. 5 in the early hours of Monday before last trading down 0.25%.
Sterling was steady at $1.3215 after jumping as high as $1.32295 on Friday for the first time in 17 months.
Although Fed officials had sounded increasingly dovish in the lead up to the Fed’s annual Jackson Hole symposium, Powell on Friday “used stronger language” than his peers when delivering his keynote speech, said Tapas Strickland, head of market economics at National Australia Bank.
Traders unanimously expect the Fed to kick off its loosening campaign on Sept. 18, but see 36.5% odds of a super-sized 50-basis point reduction, according to the CME Group’s FedWatch Tool. That’s up from 25% odds a week earlier.
Elsewhere, the Australian dollar eased 0.1% to $0.6790, but still remained close to Friday’s peak of $0.67985, the highest level since July 11.
The Chinese yuan ticked up slightly to 7.1130 per dollar in offshore trading, the strongest level since Aug. 5.
Source : Reuters