Market Update: Dollar Climbs, Yen Weakens
Key Points:
- The yen traded at 151.97 per dollar, down about 0.2% in the Asia session.
- The dollar strengthened following strong U.S. economic data, pushing the yen to a 34-year low.
- Japanese authorities intervened in October 2022 when the yen hit its weakest level since the middle of 1990.
- For the quarter ending this week, the yen is the worst-performing major currency, down over 7% against the dollar.
Market Analysis:
Officials have been issuing warnings against speculative moves, with Finance Minister Shunichi Suzuki stating that Japan may take steps if the yen falls too rapidly. The market is closely watching the 152 per dollar level for potential intervention.
BOJ policymaker Naoki Tamura emphasized the need for a gradual normalization of policies, which contributed to the dollar’s broader strength. Other currencies, such as the Chinese yuan and New Zealand dollar, also weakened.
Regional Movements:
- The yuan weakened to 7.2285 per dollar despite central bank intervention.
- New Zealand dollar fell to $0.5988 after revised economic growth forecasts.
- Australian inflation remained at a two-year low, leading to expectations of a potential interest rate cut.
Global Outlook:
Markets are awaiting the release of U.S. core inflation data, following a jump in durable goods orders in February. The euro and Swiss franc have experienced fluctuations, while the U.S. dollar index has seen a 3% increase for the quarter.
Sterling remained stable, with Bank of England policymaker Catherine Mann highlighting consumer behavior as a factor in monetary policy decisions.
