Dollar on front foot as eyes turn to Fed, yen upside down

A woman holds US dollar banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration

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SINGAPORE, Sept 15 (Reuters) – The dollar held near recent highs on Thursday as traders raised bets that the Federal Reserve will become even more aggressive next week in its battle to rein in inflation, while the yen weakened after a brief rise in the previous session. .

The dollar rose 0.14% against the yen to 143.37 in Asia, after falling 1% in the previous session following the announcement that the Bank of Japan had checked exchange rates with banks – possible preparation for the purchase of yen. Read more

But some market watchers have expressed skepticism of direct intervention or lasting impact, with Satsuki Katayama, head of a ruling party panel on financial affairs in Japan, telling Reuters the country lacks effective means. to fight against the yen. sudden falls. Read more

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Japan’s record trade deficit for August also underscored the bearish case for the yen. Read more

“The direction of the yen’s journey continues to be towards further weakness… If they are serious about stopping the weakness, then a policy change from the BOJ is the recipe,” said Rodrigo Catril, currency strategist at National Australia. Bank.

“Our feeling is that the intervention, of course, will scare off speculators on the day, but it is unlikely to last any longer.”

The Australian and New Zealand dollars gained slightly after the release of national data, which showed Australian employment rebounded in August after a surprise drop the previous month, and New Zealand’s gross domestic product (GDP) Zealand rose 1.7% in the June quarter, beating expectations for a 1.0% gain. Read more

The Aussie rose 0.15% to $0.67575, while the Kiwi gained 0.11% to $0.60085.

The pound fell 0.1% to $1.1530, while the euro slid 0.07% to $0.9971 – the two nurse losses after surprise inflation sent the greenback higher tuesday.

The euro got help from European Central Bank policymaker Francois Villeroy de Galhau who said on Wednesday that the bank’s neutral rate, estimated at or near 2% in nominal terms, could be reached by the end of the year. Read more

However, the dollar is in control ahead of next week’s Fed meeting.

Fed funds futures now predict a 37% chance that the Fed will raise rates by 100 basis points.

“The market is kind of in consolidation mode,” said NAB’s Catril. “Clearly evident in the beginning of the US Treasuries curve, the market is emboldening a little more to the reality that the Fed will remain aggressive.”

U.S. producer prices fell for a second consecutive month in August as the cost of gasoline fell further, data showed on Wednesday, although that looks a little comforting after Tuesday’s data showed already dashed hopes of cooling consumer prices. Read more

The U.S. dollar index, which measures the greenback against a basket of currencies, rose 0.12% to 109.73, not far from its two-decade high of 110.79.

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Reporting by Rae Wee; Editing by Sam Holmes and Kim Coghill

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