The dollar company nears a 32 peak against the yen despite intervention risks; sterling treads water According to Reuters

By Kevin Buckland

TOKYO (Reuters) – The dollar hung near 32-year highs against the yen on Wednesday while inching up from two-week lows against a basket of major peers as traders weigh improving risk sentiment against the prospect of a strong interest rate hike by the Federal Reserve. .

The British Pound has consolidated in the middle of its trading range this week as the market understands the UK government’s fiscal policy reversal and the Bank of England’s decision not to sell any potentially vulnerable bullion. any longer term this year. The euro hovers near a two-week high.

The dollar rallied as high as 149.395 yen overnight for the first time since August 1990, before last trading at 149.18 in early Asian trading on Wednesday.

Traders are on high alert the Ministry of Finance and the Bank of Japan will enter the market once again, as the pair pushes towards the key psychological barrier at 150. The 145 crossover around approx. a month ago prompted the first yen buying intervention since 1998.

Japanese Finance Minister Shunichi Suzuki said on Wednesday that he was checking currency rates “meticulously” and with more frequency, local media reported.

The dollar, currently the safe-haven currency of choice, has sagged this week amid a global downtrend in equities following some upbeat earnings.

But fundamental support continues to come from market valuations with two more 75 basis point hikes from the Fed this year as it focuses on red-hot inflation, even as it risks sparking a recession. Depression.

Fiscal uncertainty in the UK is also clouding the bond market outlook globally.

The dong – a measure of the currency against six currencies including the yen, pound and euro – rose to 112.01, after falling to its lowest since October 6 at 111.76 overnight. It marked a multi-decade high at 114.78 at the end of September.

“We suspect this is more than a modest pause in the dollar bull cycle,” said Sean Callow, currency strategist at Westpac in Sydney.

For the yen, “the risk of intervention remains, as the Treasury has crossed the Rubicon (but) its purpose is certainly to limit the size of speculative positioning rather than to promote an inter-related reversal.” vulgarity,” Callow said.

“A round number like 150 will likely take some work to break in the short term,” but given the BOJ’s position as the only developed market central bank still pursuing a policy of negative interest rates, it’s hard to see why the pair wouldn’t” not extend to the 150-155 area,” Callow added.

Meanwhile, the pound rose 0.27% to $1.1349, recovering from a 0.34% drop in the previous session. The coin initially rallied on Tuesday following a Financial Times report that the Bank of England would delay quantitative tightening, only to slide after the Bank called the article “inaccurate.”

The BoE said it will start selling some of its huge UK government bonds from November 1, but will not sell this year any of the longer maturities that have been at the center of the volatility. market due to “small government budget.”

The euro was flat at $0.9857, hanging just below Tuesday’s high of $0.98755, last seen on October 6.

Economists in a Reuters poll predict another 75-point rate hike from the European Central Bank next Thursday.

The New Zealand dollar remained bullish after Tuesday’s abrupt consumer price data, which raised expectations for a further strong Reserve Bank tightening. The coin trades 0.19% higher at $0.5695, close to the previous two-week high of $0.5719.

Trades changed hands at $0.6322, up 0.12% from Tuesday.