Forex

US dollar reaches 150 yen, later declines due to concerns over intervention.

The Dollar Touches 150 Yen, Sparking Intervention Concerns

Dollar Hits 150 Yen Level, Raises Intervention Worries

The dollar reached the closely watched 150 level against the yen on Friday, but quickly retreated as investors anticipated the Federal Reserve to maintain higher interest rates for a longer period. Surpassing the 150 mark is seen as a potential trigger for Japanese monetary officials to intervene due to concerns about the yen weakening excessively. Although the dollar briefly reached 150.165 on October 3 before dropping back to 147.3, market participants are uncertain whether this movement resulted from Ministry of Finance (MOF) intervention or market nerves and automated trades being triggered.

Jeremy Stretch, head of G10 currency strategy at CIBC Capital Markets, highlighted the market’s cautiousness regarding the 150 threshold, stating that it represents potential uncertainty if the MOF decides to intervene. Analysts suggest that the speed and extent of the dollar’s move above 150 will play a significant role in influencing the Ministry of Finance’s intervention decision. Currently, the dollar is up 0.11% against the Japanese currency, trading at 149.85 yen.

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Factors Influencing Dollar Rally

The dollar rally, which saw the index reach a 10-month high on October 3, has stalled despite benchmark 10-year Treasury yields consistently hitting 16-year highs. Adam Button, chief currency analyst at ForexLive, believes that the potential for MOF intervention is limiting the dollar’s gains. He suggests that the dollar would be stronger if not for the threat of intervention from Japanese monetary officials. Additionally, some analysts note that the dollar’s rally may be hampered by overcrowding among investors holding dollars.

Market Factors and Currency Movements

The odds of a Fed rate hike in December have dropped to 24% following comments by Fed Chair Jerome Powell, compared to 39% prior to his remarks. The CME Group’s Fed Watch Tool indicates a pause in November is highly likely, but rate cuts are not expected until June. Geopolitical tensions in the Middle East are also being monitored by investors for potential escalation in the war between Israel and Hamas.

The Swiss franc initially reached a six-week high against the dollar before retracing to trade at 0.8917. The franc has acted as a safe haven due to rising geopolitical tensions. The pound, on the other hand, fell to a five-month low against the euro following weak retail sales and a collapse in British consumer confidence. Sterling is currently up 0.14% against the dollar, trading at $1.2158.

Summary of Currency Bid Prices at 3:00PM (1900 GMT)

  • Dollar index: 106.1400
  • Euro/Dollar: $1.0593
  • Dollar/Yen: 149.8500
  • Euro/Yen: 158.73
  • Dollar/Swiss: 0.8917
  • Sterling/Dollar: $1.2158
  • Dollar/Canadian: 1.3701
  • Aussie/Dollar: $0.6315
  • Euro/Swiss: 0.9444
  • Euro/Sterling: 0.8711
  • NZ: $0.5824
  • Dollar/Norway: 11.0500
  • Euro/Norway: 11.7106
  • Dollar/Sweden: 10.9720
  • Euro/Sweden: 11.6239

Note: The above figures reflect the bid prices at 3:00PM (1900 GMT) on the respective trading day.

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