© Reuters. U.S. Dollar banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/file photo
By Karen Brettell and Joice Alves
NEW YORK (Reuters) – The dollar edged up to a nine-month high against the Japanese yen on Monday but dipped against a basket of currencies after Federal Reserve Chair Jerome Powell on Friday left open the possibility of further rate hikes.
The greenback hit 146.685 Japanese yen, the highest since Nov. 9.
Traders are watching out for any signs of intervention in the currency market from Japanese authorities as the yen weakens.
Bank of Japan Governor Kazuo Ueda said on Saturday that the bank will maintain the current approach to monetary policy, as underlying inflation in Japan remains “a bit below” its 2% target.
The , which measures the U.S. currency against six others, was down 0.08% at 104.07, after hitting its highest since early June on Friday at 104.44.
Investors raised bets that the U.S. central bank could hike rates again this year after Powell said that further rate increases may be needed to cool still-too-high inflation, while also promising to move with care at upcoming meetings.
Markets see an 81% chance of the Fed standing pat next month, according to the CME Group’s (NASDAQ:) FedWatch tool, but the probability of a 25 or 50 basis point hike in November is now at 57%, versus 43% a week earlier.
The market is largely consolidating before European inflation and U.S. personal consumption expenditures data due on Thursday, and ahead of Friday’s highly anticipated U.S. jobs report for August.
The euro has weakened against the greenback for the past month as the United States economy remains solid, while European growth slows.
“Europe is stagnating,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, adding that not only is the European Central Bank talking about tightening monetary policy further, government budgets for the next year also look like they are going to be cut.
The single currency was last at $1.0806, up 0.11% on the day, after falling to $1.07655 on Friday, the lowest since June 13.
steadied against the dollar, buoyed by the Chinese central bank persistently setting stronger-than-expected daily-mid-points. The spot yuan was roughly flat at 7.2928 per dollar.
The China-sensitive Australian dollar rose 0.31% to $0.6423, having taken a beating this month as worries over China’s sputtering post-pandemic recovery weighed on sentiment.
“Market confidence will unlikely improve much until there are signs of China’s weakening economic momentum turning around,” said Tommy Wu, senior economist at Commerzbank (ETR:).
China halved the stamp duty on stock trading effective Monday in the latest attempt to boost the struggling market as a recovery sputters in the world’s second-biggest economy.
However, Chandler noted “how quickly the market rebuffed the Chinese efforts to pump up their stock market.”
China’s blue-chip CSI 300 Index was up 1.2% at the close, some distance from the 5.5% jump at the market open.
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Currency bid prices at 10:10AM (1410 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 104.0700 104.1700 -0.08% 0.560% +104.1800 +103.9700
Euro/Dollar $1.0806 $1.0794 +0.11% +0.84% +$1.0822 +$1.0794
Dollar/Yen 146.5650 146.4500 +0.09% +11.80% +146.6700 +146.2800
Euro/Yen 158.37 158.07 +0.19% +12.88% +158.5600 +158.0900
Dollar/Swiss 0.8846 0.8847 +0.02% -4.30% +0.8867 +0.8819
Sterling/Dollar $1.2587 $1.2577 +0.08% +4.08% +$1.2610 +$1.2568
Dollar/Canadian 1.3578 1.3601 -0.19% +0.19% +1.3611 +1.3575
Aussie/Dollar $0.6423 $0.6403 +0.31% -5.77% +$0.6439 +$0.6403
Euro/Swiss 0.9557 0.9546 +0.12% -3.42% +0.9563 +0.9541
Euro/Sterling 0.8583 0.8575 +0.09% -2.95% +0.8598 +0.8575
NZ $0.5909 $0.5903 +0.11% -6.94% +$0.5925 +$0.5893
Dollar/Dollar
Dollar/Norway 10.6850 10.7250 -0.41% +8.83% +10.7490 +10.6680
Euro/Norway 11.5491 11.5497 -0.01% +10.06% +11.6300 +11.5211
Dollar/Sweden 10.9921 11.0547 -0.32% +5.61% +11.0686 +10.9907
Euro/Sweden 11.8787 11.9173 -0.32% +6.54% +11.9474 +11.8763
