Dollar set to snap 5-week win but yen hits lowest in almost 3 years

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  • Fed rate hike in focus as dollar retreats from 1-year high
  • Better risk appetite hurts safe-haven yen and dollar
  • Risk-sensitive Australian trade nears one-month high
  • US retail sales will be the next test for the dollar on Friday
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TOKYO, Oct 15 (Businesshala) – The dollar is headed for its first weekly decline since the beginning of last month, falling from a one-year high as traders turn their attention to a move by the US Federal Reserve to start raising interest rates. imposed upon. .

The dollar index, which measures the greenback against six rivals, was little changed on Friday at 94.034. It is on its way to a decline of about 0.1% this week, despite hitting its highest level since September 25 last year at 94.563 on Tuesday.

Improved market sentiment, which has pushed up global stock, commodity prices and bond yields, is also weighing on the safe-haven dollar.

Against only the yen – another safe haven – the dollar has managed to maintain the momentum over the past five weeks, rising 0.16% on Friday and touching 113.885 yen for the first time since December of 2018.

“We end the week with risk,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.

“Equity is rising rapidly, and JPY has no place to hedge,” Weston said, “as it will just drag down the overall portfolio performance.”

The greenback had recovered since early September on expectations of the US central bank and monetary policy tightening more rapidly than previously expected amid a recovery in the economy and rising energy prices.

Minutes of the Fed’s September meeting confirmed this week that a tapering of stimulus is certain to begin this year, though policymakers are sharply divided on inflation and what they should do about it.

Money markets are currently pricing in around 50/50 odds of an increase of 25 basis points by July.

Strategists at Westpac wrote in a client note that the dollar index “looks slightly volatile, but any decline should prove modest”.

Any fall in the index should be limited to 93.70, he added.

The next major test of the health of the US economy comes with the release of retail sales data on Friday.

The euro slipped 0.09% to $1.1588 after touching $1.1624 on Thursday for the first time since September 4.

Sterling was little changed at $1.36705 after climbing to an overnight high of $1.3734 since September 24.

The risk-sensitive Australian dollar fell 0.07% to $0.74105, after hitting a one-month high of $0.74265 in the previous session.

The New Zealand kiwi dollar fell 0.06% to $0.7033, holding most of Thursday’s 1% gain, taking it to a high of $0.70415 since Sept. 24.

Among cryptocurrencies, bitcoin held around $57,200 after touching a five-month high of $58,550 on Thursday.

Smaller rival Ether was trading at around $3,780, still hitting a near one-month high of $3,825.89 overnight.

Reporting by Kevin Buckland; Editing by Muralikumar Anantharaman

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