The dollar is set for its strongest week against the yen in three months as Federal Reserve Chair Jerome Powell and other officials hinted at the possibility of further interest rate hikes. Powell’s comments, along with those of other policymakers, were seen as hawkish by investors, leading to an increase in bond yields and a rise in the dollar. The dollar stood near a one-year high against the yen, with a weekly gain of 1.39%, the largest since August.
Tina Teng, a market analyst at CMC Markets, noted that Powell’s speech was “quite hawkish” and had a significant impact on market sentiment. Traders are closely watching for signs of intervention from the Japanese government to support the yen, as its weakness persists. Last year, authorities intervened twice in response to a slump in the currency. Carol Kong, a currency strategist at Commonwealth Bank of Australia, stated that the risk of the Bank of Japan (BOJ) stepping into the foreign exchange market to strengthen the yen has increased, although intervention is not expected unless the dollar/yen reaches about 152.
The dollar index, which measures the currency against six major peers, remained relatively unchanged at 105.91. It is on track to gain 0.81% for the week, following a 0.39% increase on Thursday. Last week, the greenback weakened after the Federal Reserve decided to keep interest rates steady and weaker-than-expected US economic data affected Treasury yields.
The euro remained steady at $1.0669 after a 0.4% decline on Thursday. Meanwhile, sterling fell by 0.1% to $1.2209 following the release of data indicating that the UK economy stagnated in the third quarter.
Bitcoin, the world’s largest cryptocurrency, held near an 18-month high, trading at $36,499. It reached a peak of $37,978 in the previous session, the highest level since May 2022. Speculation about the imminent approval of BlackRock’s spot bitcoin exchange-traded fund (ETF) has contributed to the surge in prices. BlackRock, the asset management giant, has also registered to create an ethereum trust. The potential approval of a spot crypto ETF is expected to make the sector more accessible to institutional investors, leading to increased demand and higher prices, according to Carl Szantyr, managing partner of digital asset hedge fund Blockstone Capital.
In other news, the Norwegian crown experienced a jump in value after data revealed that inflation in the country exceeded expectations in October. The dollar was down 0.69% against the Norwegian crown, with an exchange rate of 11.153 crowns to the dollar.
Sources: Reuters, CMC Markets, Commonwealth Bank of Australia
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