Dollar Set for Worst Week Since August, Yen at 150
The dollar stayed under pressure amid month-end flows and lower US yields while the yen rallied past the 150 handle for the first time in five weeks.
The Bloomberg Dollar Spot Index drops as much as 0.4%, down this week by 1.2%; 10-year US yields drop by five basis points to 4.21% after Thursday’s Thanksgiving holiday in the US.
Market is partially driven by month-end dynamics and moves are exacerbated as liquidity is thin, two Europe-based traders say.
DTCC data show options run at 60% of recent averages, while Thursday volumes hit a four-month low.
The yen strengthens after stronger-than-expected Tokyo consumer price data bolstered prospects of further Bank of Japan interest-rate hikes.
USD/JPY drops as much as 1.3% to 149.54, lowest since Oct. 21, after overall Tokyo CPI rose 2.6%, beating estimates of 2.2%; offshore leveraged desks bought the yen on the headlines.
Pair is down by 3.1% this week, the most since the period ending Aug. 2; its volatility skew however shifts higher, with the front-end narrowing yen topside premium by 20-30 basis points on a weekly basis.
Money markets assign a 60% probability that the Fed cuts interest rates by a quarter point next month, and that the BOJ hikes by a similar amount.
EUR/USD rises 0.4% to 1.0597 before paring most of the advance; resistance at 1.0624, the 21-DMA.
Euro down 2.9% this month, the most since May 2023.
GBP/USD +0.2% at 1.2706, versus 1.2750 day high; cable heads for its first weekly gain in two months.
Source : Bloomberg
