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Dollar on Track for Best Week Against Yen in Three Months as Fed Officials Signal Possible Rate Hike

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The dollar is set to have its strongest week against the yen in three months, following remarks made by Federal Reserve Chair Jerome Powell and other officials suggesting that further rate hikes may be necessary. These comments were seen as hawkish by investors, leading to an increase in bond yields and a rise in the value of the dollar.

Currently, the dollar is trading at 151.40 yen, close to its one-year high. It is on course for a weekly gain of 1.39% against the yen, marking its biggest increase since August.

Tina Teng, a market analyst at CMC Markets, described Powell’s speech as “quite hawkish,” which had a significant impact on market sentiment.

Traders are monitoring the yen closely for signs that the Japanese government will intervene to support the currency. Last year, authorities intervened twice due to a slump in the yen. However, Carol Kong, a currency strategist at Commonwealth Bank of Australia, believes that intervention is unlikely unless the dollar/yen exchange rate reaches around 152.

The dollar index, which tracks the currency against six major peers, is slightly weaker at 105.81. However, it is still set to gain 0.7% this week, making it the largest weekly rally since September 10.

Last week, the dollar experienced a decline when the Federal Reserve decided to maintain interest rates at 5.25% to 5.5%. Weaker-than-expected U.S. economic data also weighed on Treasury yields.

In other currency news, the euro has seen a slight increase and is currently trading at $1.0683, following a 0.4% drop on Thursday. European Central Bank President Christine Lagarde stated that keeping interest rates at a record high for an extended period could help return inflation to the bank’s 2% target.

The pound remains steady at around $1.2219, after data revealed that the UK economy stagnated in the third quarter.

Turning to cryptocurrencies, Bitcoin, the world’s largest cryptocurrency, is hovering near an 18-month high. It is currently priced at $36,075, reaching its peak at $37,978 in the previous session, the highest level since May 2022. The surge in prices is attributed to speculation about the imminent approval of BlackRock’s spot bitcoin exchange-traded fund (ETF). Blockstone Capital’s managing partner, Carl Szantyr, believes that the approval of a spot crypto ETF would make the sector more accessible for institutional investors, boosting demand and subsequently prices.

Lastly, the Norwegian crown experienced a jump in value after data revealed that Norway’s inflation in October was stronger than expected. This has increased expectations for a market rate hike.

Overall, the dollar’s strength against the yen, along with developments in other major currencies and cryptocurrencies, have stirred interest and uncertainty in the global financial markets. Investors are closely monitoring these developments for further insights into the future direction of various currencies and assets.

More detail via Yahoo Sports here… ( Image via Yahoo Sports )

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