📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

US dollar rises as yen weakness resumes

Published 05/06/2024, 09:02 PM
Updated 05/07/2024, 03:15 PM
© Reuters. FILE PHOTO: A man rides a bicycle past an electronic screen displaying the current Japanese Yen exchange rate against the U.S. dollar and other foreign currencies in Tokyo, Japan May 2, 2024, REUTERS/Issei Kato/File Photo

By Chuck Mikolajczak

NEW YORK (Reuters) -The U.S. dollar rose against most currencies on Tuesday, steadily gaining ground throughout the day as investors digested the latest comments from Federal Reserve officials about the possible path of interest rates.

Minneapolis Federal Reserve President Neel Kashkari said at a Milken Institute conference that stalled inflation, kept higher in part by housing market strength means the central bank will need to hold borrowing costs steady for an "extended period," and possibly all year.

Kashkari did, however, also say it is still possible the Fed could cut if inflation being to cool again.

The comments came on the heels of remarks from Fed officials on Monday that seemed to lean toward indicating the central bank's next move would be to lower interest rates.

"There isn't any consistent trend here other than what we've seen and that does not point to lower rates as much as various people in the market certainly and maybe even some people in the Fed itself would like," said Joseph Trevisani, senior analyst at FX Street in New York.

The dollar index gained 0.26% to 105.42, on track for its first consecutive daily gain in nearly a month, with the euro down 0.18% at $1.0749.

The greenback strengthened against the Japanese yen for a second straight session as expectations of large interest rate differentials continued, even after new warnings from Japanese officials about their willingness to prop up their currency.

Japan's top currency diplomat Masato Kanda said the country may have to take action against any disorderly, speculative-driven foreign exchange moves, signaling the Bank of Japan remained ready to intervene in the market after two suspected interventions of possibly almost $60 billion last week.

"The big action last week and a little bit before was the BOJ, which has achieved some success, but there's nothing really to go on right now, so things are just sort of sitting still," said Trevisani.

Against the Japanese yen, the dollar strengthened 0.55% to 154.73 after tumbling more than 3% last week, its biggest weekly percentage drop since early December 2022.

Following last week's Fed policy meeting and softer-than-expected U.S. jobs report, market expectations for two rate cuts this year have increased, with expectations for a cut of at least 25 basis points in September currently at 64.5%, according to CME's FedWatch Tool.

With a light economic calendar this week, highlighted by the consumer sentiment reading from the University of Michigan on Friday, a host of Fed officials are due to speak, including Fed Governors Lisa Cook and Michelle Bowman later in the week.

The Australian dollar fell against the greenback after the Reserve Bank of Australia kept rates steady and held back from taking a hawkish stance, although RBA Governor Michele Bullock cautioned inflation risks were on the upside, signaling policy was unlikely to be eased anytime soon.

© Reuters. FILE PHOTO: A man rides a bicycle past an electronic screen displaying the current Japanese Yen exchange rate against the U.S. dollar and other foreign currencies in Tokyo, Japan May 2, 2024, REUTERS/Issei Kato/File Photo

The Australian dollar weakened 0.53% versus the greenback at $0.6589 after falling as low as 0.6587 on the day.

Sterling weakened 0.46% to $1.2503 ahead of the Bank of England's policy announcement on Thursday, where interest rates are expected to be kept unchanged.

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.