Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dollar Climbs on Hawkish Powell Speech; Yen Slumps to Six-Year Low

Forex Mar 22, 2022 04:01AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Peter Nurse

Investing.com - The U.S. dollar strengthened Tuesday, particularly against the Japanese yen, after hawkish comments from Federal Reserve chair Jerome Powell raised expectations of a faster tightening cycle. 

At 4 AM ET (0800 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.4% higher at 98.903.

Federal Reserve Chair Jerome Powell emphasized the central bank’s desire to clamp down on surging inflation on Monday, at a conference of the National Association for Business Economics, saying the policymakers will take the “necessary steps” to get prices down.

“If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so,” Powell said.

The Fed raised the benchmark lending rate by a quarter point at their meeting last week, the first increase since December 2018, and signaled six more hikes of that size this year.

This provides a stark contrast with the stance of Japan’s central bank, which maintains an ultra-loose monetary policy lest inflation hurt the economy. BOJ Governor Haruhiko Kuroda stated on Tuesday that Tokyo must maintain its extremely stimulative monetary policy as its economy is still in the very early stages of recovery.

Two-year, five-year, 10-year and 30-year U.S. Treasury yields all climbed to their highest levels since 2019 early Tuesday, widening the gap on pinned Japanese yields, and USD/JPY soared 0.8% to 120.44, above the physiologically-important 120 level to a six-year high. The pair has gained more than 4% this month on the different policy stances. 

“USD/JPY, having broken through 120.00, had 123.00 and 125.00 potentially in its sights. Any thoughts that the Ministry of Finance will intervene were complete nonsense unless moves in the yen become extremely disorderly,” said Jeffrey Halley, OANDA’s Senior Market Analyst for Asia Pacific.

The dollar gains were not only against the yen, with EUR/USD down 0.4% to 1.0975 and GBP/USD 0.2% lower at 1.3137. Both currencies have been hit by expectations of weaker European economic growth as the Ukraine war rages on.

European Central Bank President Christine Lagarde stated on Monday that the ECB and the Federal Reserve will move out of sync in the foreseeable future, as the war in Ukraine has vastly different effects on their economies.

"Our two economies are in a different place in the economic cycle, even before the war in Ukraine," Lagarde told a financial conference. "For geographical reasons, Europe is way more exposed (to the war) than the U.S.."

AUD/USD dropped 0.2% to 0.7384, NZD/USD fell 0.1% to 0.6879, both handing back recent gains, while USD/CNY rose 0.1% to 6.3604 ahead of expected easing by China’s central bank to support the country’s struggling economic recovery.

 

Dollar Climbs on Hawkish Powell Speech; Yen Slumps to Six-Year Low
 

Related Articles

China growth woes boost dollar, weigh down Aussie
China growth woes boost dollar, weigh down Aussie By Reuters - Aug 16, 2022 3

By Alun John HONG KONG (Reuters) - The safe-haven U.S. dollar hit a three-week high on Tuesday after weak global economic data revived concerns of a global recession. The dollar...

Dollar Edges Higher; Recession Fears Boost Safe Haven
Dollar Edges Higher; Recession Fears Boost Safe Haven By Investing.com - Aug 16, 2022 3

By Peter Nurse Investing.com - The U.S. dollar edged higher in early European trade Tuesday, remaining near a one-week high as global recession fears prompted demand for the safe...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email