Dollar Eet to End Week on a High, Yen at Five-Month Low
The dollar was set to cap the week on a strong note on Friday as it was perched near a two-year high bolstered by a hawkish U.S. rate outlook, while the yen struggled to stay afloat as it again weakened to a new low.
Currencies took a breather after huge moves in the previous session sparked by a broad rally in the greenback. That drove its peers to milestone lows with the South Korean won sinking to a 15-year trough, the Canadian dollar tumbling to its weakest in more than four years and the Australian and New Zealand dollars hitting two-year lows.
Central banks from Brazil to Indonesia also scrambled to defend their struggling currencies on Thursday.
Moves in the early Asian session on Friday were more subdued, though that did not stop the yen from weakening to a five-month low of 157.93 per dollar, as it continues to remain under pressure from the Bank of Japan’s (BOJ) reluctance to further raise rates.
The BOJ kept interest rates unchanged on Thursday and its governor stayed vague on how soon it could push up borrowing costs, just a day after the Federal Reserve pointed to fewer U.S. rate cuts next year.
Some investors had expected the hawkish tilt from the Fed to give the BOJ some leeway to raise rates, or at least hint at an imminent hike in January, but the central bank ultimately offered few clues.
The euro last bought $1.03635 and was eyeing a weekly drop of 1.3% on the back of the dollar’s strength.
Similarly, sterling was headed for a 0.96% weekly decline, while the yen was set to lose more than 2.5% for the week, its worst performance since September.
The Australian and New Zealand dollars were also struggling to stay off two-year lows on Friday, with the Aussie last down 0.23% at $0.6223.
The kiwi slid 0.28% to $0.5616. Both Antipodean currencies were on track for a weekly fall of more than 2%.
Source : Reuters
