Yen teeters on cusp of 40-year low, pound bounces
Written by: Alun John and Gregor Stuart Hunter
LONDON/SINGAPORE, June 19 (Reuters) – The dollar remained firm against most currencies on Friday as the peace deal between the United States and Iran remained in balance and the yen stabilized around a two-year low.
The dollar climbed as high as 161.8 yen late Thursday and closed at 161.96 yen in July 2024. A higher reading would reach its strongest level against the yen since 1986.
It was last held steady at 161.3 on Friday, but traders remained prepared in case Japanese officials stepped directly into markets to support the currency, as they did in late April and early May.
The dollar rose 1 percent against other major currencies this week, reaching a 13-month high. That’s thanks in large part to Wednesday’s Fed meeting, where policymakers showed nine out of 19 new quarterly forecasts now predicting a rate hike by the end of the year.
“In the near term, the dollar could ride out the post-Fed excitement for a bit longer as markets are likely eager to fully price in two rate hikes by December on the first strong data push,” said ING currency strategist Francesco Pesole.
He added in a note that the US holiday meant there was a “lower liquidity backdrop, a window in which Japanese officials preferred to intervene earlier”.
“(Dollar/yen) is already deep in the intervention zone… Lack of intervention today will allow speculators to move towards 162-163 given the supportive (dollar) environment.”
Japanese interest rates, which are much lower than elsewhere, are weighing on the yen, even though the Bank of Japan this week raised interest rates to a 31-year high.
Concerns about Japanese Prime Minister Sanae Takaichi’s spending plans have also shaken investor confidence and led to speculation that more intervention may be coming.
The safe-haven US currency was also supported on Friday by tensions over the US-Iran deal to end their war. Switzerland said US talks with Iranian negotiators will not take place on Friday.
The dollar gained ground relative to its European peers earlier in the day, but this began to fade by mid-morning in Europe.
The euro rebounded from a three-month low of $1.1418 to trade flat at $1.1464.
Sterling hit a two-month low of $1.3164 but was last seen at $1.323, up 0.2% on the day.
With Friday data showing May retail sales stronger than expected, separate figures showing a larger-than-expected budget deficit and Labor mayor Andy Burnham decisively winning parliamentary seats in northern England that could pave the way to oust British Prime Minister Keir Starmer, sterling investors had a lot to digest.
