The yen rose after the intervention, and the dollar ended strong

The yen rose after the intervention, and the dollar ended strong

By Ray Wei

SINGAPORE (Reuters) – The yen was on track for its first weekly gain in more than a month on Friday after Japanese authorities intervened in foreign exchange markets for the first time since 1998, while the dollar’s rally kept other currencies near multi-year lows. .

The yen rose about 0.1% to 142.24 against the dollar in early Asian trade, although trading was thin with Japan on a public holiday.

The yen rose more than 1% and hit an intraday low of 140.31 on Thursday, after news of Japan buying the yen to defend its declining currency.

The move, which occurred in the late hours of Asia, came after the Bank of Japan stuck to ultra-low interest rates, which saw the yen drop to a new 24-year low and dip below 145 against the dollar in the aftermath.

Ray Attrell, Head of FX Strategy at National Australia Bank (OTC πŸ™‚ said.

“My sense is that the law of diminishing returns will begin, as far as intervention is concerned.”

Meanwhile, Sterling rose 0.05% to $1.12645, but stayed away from a 37-year low of $1.1213 in the previous session and was not helped much by a 50 basis point BoE rate hike overnight.

The euro, similarly, was holding near fresh lows on Friday in the face of a stronger dollar, which was supported by the very hawkish Federal Reserve and rising Treasury yields that kept the dollar in demand.

The benchmark 10-year Treasury yield reached an 11-year high of 3.718% overnight, while the two-year yield remained well above 4% and last settled at 4.1223%.

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β€œIronically, I think the rise in US Treasuries overnight, particularly the ten-year area, is a direct consequence of the view that the Bank of Japan will have to sell Treasuries, to supply dollars in order to intervene… outside the dollar/yen, It will make the dollar more attractive against other currencies,” Atrell said.

It held to 111.27, hovering near a two-decade high of 111.81 hit in the previous session, and is on track for a weekly gain of 1.5%.

The euro was marginally higher by 0.02% at $0.9836, after falling to a new 20-year low of $0.9807 overnight.

September PMIs for the eurozone, UK and US are due later on Friday, which will provide a better overview of the bleak global outlook.

The Australian dollar rose 0.11% to $0.6649, while the New Zealand dollar rose 0.05% to $0.5849, both of which lost ground after dropping to their lowest levels since 2020 in the previous session.

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