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Dollar set for biggest weekly gain as yen slips again
The dollar index was up about 0.7% for the week, with dollar-yen near a November 1986 high as markets priced out any BOJ rate hike next week.
The dollar was on track for its biggest weekly gain since mid-June, while the yen was set for its largest weekly percentage decline in more than two months, according to Reuters. The move comes as the yen remains near 40-year lows despite Japan’s stated readiness to support the currency in the foreign exchange market.
Japan’s Finance Minister Satsuki Katayama reiterated on Friday that the government is prepared to take action, but analysts cited by Reuters said any additional intervention may have only a short-lived effect without broader steps, such as a more aggressive rate-hike path from the Bank of Japan. The U.S. Treasury Department also joined calls for BOJ rate hikes, warning that excessive currency volatility is undesirable.
Markets have priced out any chance of a BOJ rate hike at next week’s policy meeting, according to LSEG data cited by Reuters. Analysts also tied the yen weakness to Japan’s low-yield profile and a terms-of-trade shock, while the dollar benefited from higher oil prices that revived inflation concerns and supported expectations for potential Fed tightening.
In trading, the dollar index inched up 0.01% to 101.46, and was up about 0.7% for the week. Against the yen, the dollar was down 0.02% to 163.81 but up nearly 0.9% on the week, with the dollar hitting 163.98 on Thursday, its strongest since November 1986, as U.S. crude and Brent fell on the day.
Latest closeWTI crude $92.23 ▲6.2%|Brent $100.54 ▲6.9%|Dollar index 101.44 ▲0.3%