Dollar Rises; Yen Gains on Geopolitical Risks, BOJ
The dollar pushed higher in choppy trade alongside rising Treasury yields. The yen advanced on haven flows amid the escalation of Ukraine-Russia hostilities and as traders look ahead to the Bank of Japan’s decision next month.
The Bloomberg Dollar Spot Index up 0.2% after rising 0.4% on Wednesday; earlier, fell as much as 0.2%.
10-year Treasury yield up 1.2bp to 4.42%.
Weekly initial jobless claims came in at 213k versus 220k estimate
New York Fed President John Williams said inflation is “not quite there yet,” according to a Barron’s interview conducted Nov. 15.
G-10 flows are muted with real money names seen on the sidelines this week, Europe-based traders say.
Options volumes run at half of recent averages, according to DTCC data.
USD/JPY falls as much as 0.98% to 153.91 session low before paring drop; yen outperforms among G-10 peers.
Ukraine said Russia launched a “new” kind of ballistic missile at Dnipro in further escalation of hostilities; WTI crude futures rise by 2.1% above $70 per barrel.
“The JPY is a clear outperformer on the session as markets react to more Ukraine headlines,” while comments from BOJ Governor Ueda “bolster expectations of a BOJ hike in December,” wrote Shaun Osborne, chief foreign-exchange strategist at Scotiabank.
Money markets price some 12bp of interest-rate hikes in December and fully price a quarter-point increase by March.
One-month risk reversals trade at a 177 basis-point premium in favor of the yen, the most since mid-September.
EUR/USD falls 0.8% to 1.0462 session low, the weakest since October 2023 and eyes push below 1.0448 level, which would be weakest since 2022.
Potential trade levies during a second Donald Trump presidency wouldn’t derail the European Central Bank’s easing plans, Governing Council member Francois Villeroy de Galhau said.
ECB Executive Board Member Frank Elderson said the central bank can’t afford to ignore supply shocks to the economy given their impact on inflation.
EUR/CHF down 0.3% to 0.9292, lowest since Aug. 6; EUR/JPY falls 1.2% to 161.98.
GBP/USD drops 0.4% to 1.2599.
Bank of England rate-setter Catherine Mann said Thursday that cutting rates by a percentage point over the next year would fan inflation
Source : Bloomberg
