5 hrs ago
Yen Hits Seven-Month High as Dollar Waits for CPI
The Japanese yen became more valuable compared with the U.S. dollar.
It reached its strongest level in about seven months.
Traders are closing bets that had expected the yen to weaken.
Some investors also think the Bank of Japan may raise interest rates faster.
They are waiting for U.S. inflation data called the Consumer Price Index, or CPI.
This information may help markets guess what the Federal Reserve will do with interest rates.
The U.S. dollar was slightly weaker against several currencies.
Oil prices stayed high because of worries about possible conflict involving Iran and the United States.
The Japanese yen rose to 153.53 per U.S. dollar, its strongest level since February.
The yen has gained nearly 4% from around 160 per dollar early last week.
Traders cited expectations of faster Bank of Japan tightening, repatriation flows and unwinding carry trades.
The dollar index edged lower to 98.83 ahead of U.S. inflation data and the Federal Reserve meeting.
Oil prices remained near a six-week high as Iran threatened retaliation against potential U.S. attacks.
- Who
- Currency traders, the Bank of Japan, the Federal Reserve and investors in Japanese and U.S. markets.
- What
- The Japanese yen extended its rally to a seven-month high while the U.S. dollar weakened slightly ahead of U.S. CPI data.
- Where
- In global currency markets, with trading reported from Hong Kong; geopolitical concerns centered on the Gulf.
- When
- Tuesday, September 8; the CPI data and Federal Reserve meeting were due later in the week and on September 15-16, respectively.
- Why
- Traders were unwinding yen-short positions and carry trades, increasing bets on Bank of Japan tightening, and awaiting U.S. inflation data to assess the Federal Reserve’s rate path.
Key facts
- Yen’s high
- 153.53 per U.S. dollar
- Yen’s recent gain
- Nearly 4% from around 160 per dollar early the previous week
- Dollar index
- 98.83
- Key economic data
- U.S. Consumer Price Index readings due during the week
- Federal Reserve meeting
- Scheduled for September 15-16
- Oil price
- Brent crude futures remained above $97 per barrel
- China’s offshore yuan
- Near a 3.5-year high at 6.708 per dollar
Quotes
Tony Sycamore
Market analyst at IG
“The drop looked more like a sharp unwind of yen shorts after the pair broke below critical supports”
livemint.com
Sources
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