The US dollar found some support in Asia on Thursday as commodity currencies took a breather from a steep rally fueled by rising export prices, while a recovery in the US bond market offered little comfort to the battered yen.
The Australian and New Zealand dollars hovered just below multi-month highs and the euro held steady at $1.0989 after a slight overnight drop.
The yen hit a six-year low of 121.41 per dollar on Wednesday and was held near that level at 121.25 in morning trade as investors expect the Bank of Japan to lag far behind monetary tightening by other major central banks in a fight against inflation will lag behind.
An increasingly hawkish-sounding Federal Reserve has widened this policy gap with the Bank of Japan, although even an overnight reassurance in the Treasury market after some brutal selling sessions didn’t seem to help the yen much.
“The fundamental drivers of dollar/yen now are US interest rates and Japan’s current account deterioration on high oil prices,” said Shinichiro Kadota, senior FX strategist at Barclays in Tokyo.
“Technically speaking, around 121.7 was the early 2016 high, so that would be the next key target in the very near future, but if we break above that, 125 could come into focus.”
Benchmark 10-year Treasury bonds, battered by another round of betting on aggressive US rate hikes, regained their composure overnight and yields fell 9 basis points (bps) – although they are still up more than 50 bps this month are.
Elsewhere, the Australian dollar held steady at $0.7494 overnight after a brief trip above $0.75.
The New Zealand dollar was down 0.2% to $0.6960.
Sterling slipped overnight, trading marginally weaker at $1.3187 on Thursday, despite February inflation being a bit hotter than expected.
Calmer bond market, little salve for the unloved yen – SABC News
Source link Calmer bond market, little salve for the unloved yen – SABC News