By Rae Wee and Kevin Buckland
SINGAPORE/TOKYO (Reuters) – The U.S. dollar rose broadly on Thursday, especially against the yen, as investors braced for higher U.S. interest rates , while Japan is expected to be anchored
the dollar hits 24 year highs 14.69 In early Asia Against the yen in trade, the previous day’s close rose about 0.5%.
“The main driver remains the interest rate differential between Japan and the U.S., and even today’s price action is only after overnight U.S. rates moved higher. We think the path ahead will depend on how U.S. rates move performance,” said Sosuke Nakamura, a strategist at JPMorgan Chase & Co (NYSE: JPM) in Tokyo.
On the back of solid economic data, the U.S. rate hike at the Fed meeting next month 24 bps expectations are rising, fed funds futures last pointing to 24% chan
“As long as expectations for a peak in the fed funds rate continue to rise and the Bank of Japan remains on hold, USD/JPY will be buying the dip. Now,” said Sean Carlow, currency strategist at Westpac in Sydney. Anywhere low140 looks reasonable.
A surge in the dollar also dragged down other major currencies, with the pound down About 0.4% to a fresh 2-1/2-year low of $1.1570 Dark clouds hang over UK Sterling fell 4.6% in August, its biggest monthly drop since October 6102.
The risk-sensitive Australian and New Zealand dollars also hit their lowest levels since July, Australian dollar fell 0.6% to $0. 6805, while
The euro fell 0.3% but held above par 1 USD.24, in red – high inflation triggers interest rate expectations in Europe.
Euro zone inflation rose to a record high of 9.1% in August, data released on Wednesday showed, providing the basis for further expansion by the European Central Bank by raising interest rates to tame it.
Markets have priced in about 24% chance that the ECB will raise interest rates next week 24 basis points, even with higher oil prices, the risk of a recession rises.
“High inflation and (the) gas supply remain the euro area’s and the main issue in the UK, which I think will put downward pressure on both currencies,” said Joseph Capurso, head of international economics at Commonwealth Bank of Australia (OTC: CMWAY).
“I can see the euro back below parity soon. “
The dollar index , which measures the greenback against a basket of currencies, rose 0. 14% exist109., not far from its two-decade high 109.69 Monday is coming.
“The dollar is a little bit more up. , in part because we believe the market is underestimating how high the Fed can go to the funds rate,” said CBA’s Capurso.
U.S. Treasury yields rose accordingly. Two-year Treasury yields hit 3.69% peak, the highest since the last session 109, while Expectations for peak federal funds rate are gradually approaching 4%.