U.S. dollar holds its strength
(MENAFN) The U.S. dollar held its strength on Wednesday, while the Japanese yen weakened, approaching levels that triggered intervention last year. The yen dropped to 158.42, its lowest point against the dollar in almost six months, before recovering slightly to 158.19.
Japanese Finance Minister Katsunobu Kato issued a warning against speculative selling of the yen, as the exchange rate neared the 160 mark, which had prompted intervention to sell the dollar half a year ago.
Bart Wakabayashi, Director at State Street’s Tokyo branch, pointed out that this level represents significant resistance, with strong U.S. economic data driving expectations of higher yields and delaying any potential rate cuts by the Federal Reserve until the summer or beyond.
The euro fell by 0.5%, trading at $1.0351, and the British pound dropped to $1.2478. The Chinese yuan also weakened, hitting a six-month low of 7.3319 per dollar.
Market sentiment remained cautious ahead of U.S. labor data on Friday and the inauguration of Donald Trump on January 20, when he is expected to announce several new policies. Recent data showed unexpected job growth in November and a decline in layoffs, along with accelerating activity in the services sector, signaling potential inflation.
The bond market reacted to these developments, with 10-year U.S. Treasury yields rising more than 8 basis points to 4.699%, the highest in eight months, while 30-year yields approached 5%.
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