FOREX-Dollar hits highest vs yen in nearly 3 years as markets retain Fed taper bets

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* Graphic: World FX Rates

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LONDON, Oct 11 (Businesshala) – The dollar rose against the yen to a nearly three-year high on Monday as investors were confident the US Federal Reserve would continue its massive bond-buying next month despite soft US payrolls data. will announce.

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Job data released on Friday pushed US bond yields higher, and so the yen, which is known to be particularly sensitive to yield differentials, rose to 112.84 yen per dollar in early London trading on Monday. fell – a level last seen in December. 2018.

The Japanese currency was also hurt by a slight tilt towards riskier currencies such as the sterling and the Australian dollar both made little gains on the greenback, leaving the dollar index a touch lower at 94.137, but a one-year low of 94.504. Didn’t touch too far from the high level. Month.

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The yen has also been weighed down by crude oil’s continued rally, given Japan’s status as a net oil importer, said Joel Kruger, currency strategist at LMX, adding that the currency was also under monetary policy divergence between the Bank of Japan and its is affected by. Colleagues, driving a wide yield gap.

“The yen has seen widespread selling pressure for the third day in a row,” Kruger said. “It’s down to a feedback loop with Japanese stocks rallying, while broad sentiment has been raised by PM Kishida’s capital gains tax remarks.”

Japan’s Nikkei 225 stock market index rose for a third consecutive session on Monday, extending its recovery from a six-week low last week, as a sharp fall in exporters boosted the yen, while COVID-19 infections eased. The fall added to the hopes of an economic reopening.

Also underscoring the stock, Japanese Prime Minister Fumio Kishida said on Monday he would prefer raising wages through tax incentives rather than imposing higher levies on capital gains and dividends to address Japan’s income gap.

US currency and fixed income markets remain closed for the holiday on Monday, but the benchmark 10-year Treasury yield hit a four-month high of 1.617% on Friday, even as data showed the US The economy created the fewest jobs in nine months in September. Estimates of poor performing economists.

However, the August figures were sharply revised down and the unemployment rate fell to an 18-month low, suggesting that fears of a labor shortage are justified, keeping concerns about inflation alive and asking the Federal Reserve. Justified reducing its emergency incentives that began last year.

“Although the headline payroll figure was weak, when you look at the details, the outlook remains solid and there is nothing that can stop the Fed from thinning next month,” said Shinichiro Kadota, senior FX strategist at Barclays.

The Chinese yuan was slightly shaken by the ongoing travails of Chinese developer China Evergrande Group, even as offshore bondholders reported more than $148 million in bond coupon payments after two coupon deadlines were missed last month. was prepared.

The offshore yuan was at the top end of its recent range at 6.4370 per dollar, but still lower than its high of 6.422 hit in September.

The Australian dollar strengthened slightly, nearing its highest level in a month, helped by firmer commodity prices and a partial reopening of Australia’s largest city, Sydney.

Concerns about inflation are not limited to the United States, with supply disruptions and rising commodity prices affecting many other countries.

The British pound held firm at $1.3634, extending its recovery from a nine-month low late last month on hopes the Bank of England could raise interest rates to curb rising inflation.

Surprisingly strong Canadian payroll data and higher oil prices led the Canadian dollar to change hands at C$1.2450 per US dollar, reaching a two-month high of C$1.24465.

On the other hand, the euro was soft at $1.1575, slightly up from Wednesday’s low of $1.1529, the weakest level since July last year.

In crypto, Bitcoin rose 3.5% to a new five-month high of $57,092 to gain over the weekend, while Ether also gained 5% to $3,620.

Reporting by Rithvik Carvalho; Additional reporting by Hideyuki Sano and Alun John in Tokyo and Hong Kong; Editing by Ana Nicolasi da Costa


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