Traders are watching out for any signs of intervention in the currency market from Japanese authorities as the yen weakens.”
Traders are watching out for any signs of intervention in the currency market from Japanese authorities as the yen weakens.
The dollar edged up to a nine-month high against the Japanese yen on Monday but dipped against a basket of currencies after U.S. Federal Reserves left open the possibility of further rate hikes.
The greenback hit 146.685 Japanese yen, the highest since November 9.
Traders are watching out for any signs of intervention in the currency market from Japanese authorities as the yen weakens.
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Bank of Japan Governor, Kazuo Ueda, said on Saturday that the bank would maintain the current approach to monetary policy, as underlying inflation in Japan remains “a bit below” its 2% target.
The dollar index, which measures the U.S. currency against six others, was down 0.08% at 104.07, after hitting its highest since early June on Friday at 104.44.
Investors raised bets that the U.S. central bank could hike rates again this year after Federal Reserves Chair, Jerome Powell, hinted that rate increases may be needed to reduce high inflation.
Markets see an 81% chance of the Fed standing pat next month, according to the CME Group’s FedWatch tool, but the probability of a 25 or 50 basis point hike in November is now at 57%, versus 43% a week earlier.
The market is largely consolidating before European inflation and U.S. personal consumption expenditures data due on Thursday, and ahead of Friday’s highly anticipated U.S. jobs report for August.
Euro Weakens
The euro has weakened against the greenback for the past month, as the United States economy remains solid, while European growth slows.
“Europe is stagnating,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
Also, he added that not only is the European Central Bank talking about tightening monetary policy further, government budgets for the next year also look like they are going to be cut.
The single currency was last at $1.0806, up 0.11% on the day, after falling to $1.07655 on Friday, the lowest since June 13.
China’s Weakening Economic Momentum
China’s yuan steadied against the dollar, buoyed by the Chinese central bank persistently setting stronger-than-expected daily-mid-points. The spot yuan was roughly flat at 7.2928 per dollar.
The China-sensitive Australian dollar rose 0.31% to $0.6423, having taken a beating this month as worries over China’s sputtering post-pandemic recovery weighed on sentiment.
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“Market confidence will unlikely improve much until there are signs of China’s weakening economic momentum turning around,” said Tommy Wu, senior economist at Commerzbank.
China halved the stamp duty on stock trading effective on Monday in the latest attempt to boost the struggling market, as a recovery sputter in the world’s second-biggest economy.
However, Chandler noted “how quickly the market rebuffed the Chinese efforts to pump up their stock market”.
China’s blue-chip CSI 300 Index was up 1.2% at the close, some distance from the 5.5% jump at the market open.
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