Business
Yen falls to fresh 11-month low against dollar, focus on intervention risks
The dollar rose against the yen to an almost 11-month high on Monday following last week’s gains, keeping traders focused on Japan intervention risks.
The yen fell 0.17% to 148.66 per dollar, touching its lowest since late October and adding to Friday’s declines after the BOJ maintained ultra-low interest rates, while Governor Kazuo Ueda stressed the need to spend more time assessing data before raising interest rates.
The Japanese currency remained within striking distance of 150, a level which some market watchers saw as a line in the sand that would spur forex intervention from Japanese authorities similar to that of last year.
“According to BoJ Governor Kazuo Ueda there was no sign yet of stable inflation on a sustainable basis so that the BoJ will patiently continue with monetary easing under the current framework. That was a clear dampener for the yen,” said Esther Reichelt, FX analyst at Commerzbank.
A yen overshooting would be seen by many as a catalyst for renewed interventions to strengthen the Japanese currency, similarly to last year, she added.
“It is possible of course that exactly such fears of interventions might have prevented a weaker yen for now”.
The dollar index , which on Friday touched an over six-month high, firmed at 105.64 and was last 0.06% higher.
Last week, the Federal Reserve kept rates on hold at its policy meeting, but surprised markets by signalling U.S. rates would need to stay higher for longer than expected.
On Friday, Fed officials warned of further rate hikes ahead. Markets now see a 25% chance of a 25-basis-point increase at November’s meeting.
Elsewhere, the Swedish crown jumped to an almost seven-week high, up 1% against the euro to 11,7300.
Nick Rees, FX market analyst Monex Europe, said the crown was firming on the back of news that Swedish property group SBB (SBBb.ST) had secured an 8 billion crown ($719 million) cash boost and said it would reorganise its business.
“It is a positive sign for the Swedish economy, and we’ve not had many of them recently,” he said.
EURO FACES GROWTH FEARS
The euro edged 0.1% lower to $1.0633, moving towards a six-month low of $1.0615 touched on Friday against a stronger dollar.
The single currency was on track to lose roughly 1.9% for the month, its steepest monthly fall since May, amid growing recession fears.
A survey showed on Monday German business morale deteriorated slightly in September, falling for the fifth month and underlining recession fears in the euro zone’s largest economy.
“That (recession threat) does not only suggest that a further rate hike in the euro zone is becoming increasingly less likely but also that the market is going to stick to its rate cut expectations for next year, which is putting pressure on the euro for now,” Reichelt said.
The European Central Bank has reached the point where it needs to be wary of raising interest rates too high and should try to avoid a hard landing of the economy, ECB policymaker Francois Villeroy de Galhau said on Monday.
Sterling eased 0.17% to $1.2224, after sliding more than 1% last week on the back of the Bank of England’s pause on its rate-hike cycle, a decision which came a day after data showed Britain’s high inflation rate unexpectedly slowed.
The pound was headed for a 3.5% fall in September, its worst monthly performance in a year.
The dollar steadied against major peers on Thursday, continuing its near paralysis of the past two days before more concrete announcements on tariffs from U.S. President Donald Trump.
A spate of central bank policy decisions are also due over the next week, with the Bank of Japan widely expected to raise interest rates at the end of a two-day meeting on Friday.
Rate decisions from the U.S. Federal Reserve and European Central Bank are scheduled for Wednesday and Thursday of next week, respectively.
The dollar index – which measures the currency versus six top rivals, including the euro and yen – was flat at 108.25, following two days of gains of around 0.1%.
On Monday, it tumbled 1.2%, its steepest one-day slide since November 2023, as Trump’s first day in office brought a barrage of executive orders, but none on tariffs.
So far this week, Trump has mooted levies of around 25% on Canada and Mexico and 10% on China from Feb. 1. He also promised duties on European imports, without giving details.
“President Trump has so far taken a less hostile-than-expected approach to China,” amid overall “softer-than-expected policies and tone on tariffs”, said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
At the same time, “we are cautious (that) risk sentiment remains fragile and can quickly turn sour if President Trump strikes a more aggressive tone.”
The Chinese yuan was little changed at 7.2812 per dollar in offshore trading .
Wall Street’s main indexes rose Wednesday, with the S&P 500 hitting an intraday record high thanks to strong Netflix earnings and a rally in tech shares.
Japan’s yen edged up about 0.1% to 156.40 with markets pricing 95% odds of a quarter-point hike on Friday.
The euro was flat at $1.0411. The ECB is widely expected to cut rates by a quarter point next week.
The Canadian dollar held steady at C$1.4386 against the greenback. The Bank of Canada is seen as likely to reduce rates by a quarter point next Wednesday.
The Mexican peso was little changed at 20.47 versus the U.S. currency.
Oil prices dipped in early trade on Thursday, extending losses amid uncertainty over how proposed tariffs by U.S. President Donald Trump on several countries would impact global economic growth and energy demand.
Brent crude futures fell 23 cents, or 0.3%, to $78.79 a barrel at 0135 GMT, while U.S. West Texas Intermediate crude (WTI) eased 18 cents, or 0.2%, to $75.26.
In its previous session, Brent futures settled at $79.00 in a fifth straight day of losses. WTI futures settled at $75.44 in a fourth consecutive day of declines.
Trump has said he would add new tariffs to his sanctions threat against Russia if the country does not make a deal to end its war in Ukraine. He added these could be applied to “other participating countries” as well.
He also vowed to hit the European Union with tariffs, impose 25% tariffs against Canada and Mexico, and said his administration was discussing a 10% punitive duty on China because fentanyl is being sent to the U.S. from there.
Meanwhile, estimates from an extended Reuters poll showed that on average U.S. crude oil stockpiles were expected to have fallen by 1.6 million barrels in the week to Jan. 17.
Gasoline stockpiles were estimated to have risen by 2.3 million barrels last week, and distillate inventories were likely to have gained 300,000 barrels.
The poll was conducted ahead of the American Petroleum Institute industry group’s report and another from the Energy Information Administration at 12:00 p.m. ET (1700 GMT) on Thursday.
European wind shares fell on Tuesday (January 21).
The reports were delayed by a day due to the Martin Luther King Jr. Day federal holiday on Monday.
Pakistan and Saudi Arabia have reaffirmed their commitment to further strengthening the bilateral economic ties for shared prosperity.
The commitment was expressed when Finance Minister Muhammad Aurangzeb met with his Saudi counterpart Mohammad bin Abdullah Al-Jadaan on the sidelines of World Economic Forum Annual Meeting in Davos.
Muhammad Aurangzeb highlighted the key reform measures undertaken by the Government to promote economic stability and sustainable growth.
He briefed him on structural reforms, fiscal discipline and regulatory improvements that have contributed to an improved investment climate in Pakistan.
Earlier, Aurangzeb met Anna Bjerde, Managing Director of Operations at the World Bank.
They discussed cooperation between Pakistan and the World Bank, with a particular focus on Pakistan’s macroeconomic stability.
The finance minister emphasized the government’s strong partnership with the Bank and expressed hope that the World Bank would continue playing a key role in the country’s socio-economic development.
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