Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Dollar slips after hitting one-year high against yen

Published 11/12/2023, 08:44 PM
Updated 11/13/2023, 04:23 PM
© Reuters. FILE PHOTO: U.S. one dollar banknotes are seen in front of displayed stock graph in this illustration taken, February 8, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

By Herbert Lash

NEW YORK (Reuters) -The dollar climbed to its highest level in more than a year against the Japanese yen on Monday, near the key psychological level of 152, before falling sharply in a flurry of trading in $3.45 billion of options that come due this week.

The dollar later traded little changed on expectations a soft reading of the U.S. consumer price index (CPI) on Tuesday will keep Treasury yields trending lower as the market perceives the Federal Reserve is done hiking interest rates.

The dollar early in the session shot to 151.92 yen, the highest since October 2022, about 20 minutes before some $1.25 billion in options contracts were set to expire with a 152 strike price, analysts said.

The dollar suddenly dropped to 151.20, minutes after a 10 a.m. ET (1500 GMT) strike price deadline. Another $2.2 billion are set to expire on Wednesday, the analysts said.

The yen's sharp rebound against the dollar was not due to Bank of Japan intervention, said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

"The dollar/yen came off after almost reaching last year's high at 10 a.m." he said. "The same thing happened in early October."

Markets have been alert to potential intervention from Tokyo to shore up the battered yen. Earlier in Japan, Finance Minister Shunichi Suzuki said the government would keep monitoring the currency market and respond appropriately.

The dollar was last up 0.12% at 151.680 yen. The yen has fallen almost 14% against the dollar so far this year.

Fed Chief Jerome Powell and policymakers want markets to be wary in the hope rates stay high and keep monetary policy tight without the need to raise the Fed's lending rate further, said Joseph Trevisani, senior analyst at

"That's why their rhetoric is much stronger than their actions right now," Trevisani said. "Rates are going to go down, bond prices are going to go up" if credit markets really think that the Fed is done raising rates, he said.

"That'll take the dollar lower because I do think the Fed is pretty much done raising rates."

The dollar index, a measure of the U.S. currency against six others, fell 0.09% at 105.64.

The reaction to a subdued CPI number is likely to be shallow because U.S. retail sales on Wednesday will be more important as they should better reveal the economy's strength, said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi US in Boston.

"All the signs have been pointing to continued momentum on consumption," Upadhyaya said. "If we see an upside surprise ... the markets are going to begin to price in a rate hike in December."

The market barely reacted to news late on Friday that Moody's (NYSE:MCO) cut the outlook for U.S. credit to negative from stable.

The euro roseup 0.15% to $1.0697 as sterling strengthened after a reshuffle of key posts in the British government by Prime Minister Rishi Sunak.

© Reuters. FILE PHOTO: Japanese Yen and U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo

Britain's currency rose about 0.44% at $1.2279 and about 0.27% firmer against the euro at around 87.14 pence after news of changes to the make-up of the UK government.

Sunak brought back former leader David Cameron as foreign minister in a reshuffle triggered by his firing of Interior Minister Suella Braverman after her criticism of the police threatened his authority.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.