Dollar Rises to Highest in a Week, Yen Weakens
The yen led declines in the G10 region, pressured by month-end flows and investors taking profits from long positions. The dollar rose as traders awaited clarity on the start date of U.S. trade levies on Mexican and Canadian goods.
USD/JPY rose 0.6% to 149.97; trail stops and stop losses were triggered above 149.40, while month-end corporate rebalancing benefited the greenback overall, Europe-based traders said
Japanese Vice Finance Minister for International Affairs Atsushi Mimura indicated that he was not concerned about rising market expectations for a Bank of Japan rate hike. Mimura also highlighted the need to be wary of any potential for excessive moves in foreign exchange rates
The Bloomberg Dollar Spot Index rose for a second day and rose 0.2% to its highest in a week while the yield on the 10-year Treasury note rose 5bps to 4.31%
"Month-end flows will dominate FX into the end of the week as we await further clarity on whether tariffs on Mexico and Canada have been pushed back," said Tony Sycamore, an analyst at IG
EUR/USD fell as much as 0.3% to 1.0459 before paring losses; one-week risk reversals were trading earlier at 22bps, put over call, the least bearish level since Feb. 18
The tenor captures the next ECB meeting, but it's not just a reflection of bets on a less dovish-than-expected decision; similar moves have been seen in longer tenors, and may be a sign that rates are turning from an inflation story to a growth story that won’t support the dollar
EUR/CHF rose as much as 0.4% to 0.9415
GBP/USD halved a 0.2% decline to trade at 1.2668; UK Prime Minister Keir Starmer to hold first face-to-face meeting with Trump
Source: Bloomberg
