The US Dollar Rallies To a Fresh One-Year High

(CTN News) – On Monday, the U.S. dollar reached its highest level against the Japanese yen in over a year. It continued to benefit from a scaling back of expectations for an interest rate cut by the Federal Reserve in 2019.

Shunichi Suzuki, the Japanese Finance Minister, said the government would monitor the currency market and respond accordingly. As a result, the yen was little affected by the comments, which are down almost 14% against the dollar this year.

After British Prime Minister Rishi Sunak reshuffled key posts in his government, sterling edged higher.

As traders waited for the latest U.S. inflation numbers on Tuesday to decide whether to cut rates next year, the tone on global currency markets was generally subdued.

Despite the dollar’s peak and the U.S. economy slowing, people are waiting for confirmation,” said Societe Generale strategist Kit Juckes.  Given the movement in U.S. government bonds, the yen has not rallied yet,” he said.

On Monday, the dollar reached 151.88 yen, its highest level since October 2022. Over the past week, it gained around 1.4% in the biggest weekly gain against the yen in three months, closing up 0.15% last week.

Fed policymakers, including Chair Jerome Powell, last week suggested the fight against inflation may not be over yet, causing market bets to be scaled back, pushing up short-dated Treasury yields.

It held on to most of last week’s gains as the dollar index, measuring the greenback’s value against other major currencies, climbed a bit to 150.80.

A cut in Moody’s outlook for U.S. credit late on Friday showed little reaction in the market.

On Monday, Japan’s wholesale inflation rate dipped below 1% for the first time in more than two-and-a-half years, suggesting that cost pressures driving up prices are now fading and giving the yen little support. In spite of that, markets remained on edge as Tokyo attempted to shore up the battered yen through possible intervention.

When it comes to Japanese currency intervention risks, if we move at the current pace, it is manageable,” said BNY Mellon senior macro strategist Geoff Yu.

In general, the dollar environment drives things, he said. Compared with the euro, sterling was 0.2% higher at $1.2254, while the euro was slightly higher at $1.0684.

Following news of changes to the UK government’s composition, the British currency was 0.2% firmer against the euro at around 87.24 pence. As part of a reshuffle sparked by Suella Braverman’s criticism of the police, Sunak brought back David Cameron as foreign minister.

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