© Reuters. FILE PHOTO: US dollar banknotes are seen in this illustration taken on March 10, 2023. REUTERS/Dado Rovic/Illustration
Written by Hannah Lang and Elon John
WASHINGTON/LONDON (Reuters) – Currency markets were volatile on Tuesday as the dollar hit a 10-week high against its peers and a six-month high against the yen before retreating after Japanese officials pushed up their currency.
Japan will closely monitor currency market movements and respond “appropriately” as needed, Japan’s top currency diplomat said on Tuesday, after financial authorities met in response to the yen’s weakness to a six-month low against the dollar.
The yen strengthened after news of the meeting, and held on to those gains, with the currency finally rising 0.46% against the dollar at 139.80 after earlier rising to 140.93, the highest level since November 2022.
The Japanese currency is coming into focus ahead of potential elections, as Japan is a major energy importer, and subsidies for gasoline are coming to an end, said Derek Halpenny, head of research at MUFG, Global Markets EMEA.
“If (Prime Minister) Kishida is looking at early elections, he wants to be seen as addressing one of the sources of energy inflation which is currency depreciation,” Halpenny said.
US President Joe Biden and Republican House Speaker Kevin McCarthy on Sunday signed an agreement to temporarily suspend the US debt ceiling and cover some federal spending in order to prevent a debt default.
That helped it, which measures the greenback against six major peers, to 104.53 in European trade, a 10-week high. But then it retreated, last down 0.201% at 104,080.
“It’s been a one-way trade in the dollar all month, and given the uncertainty around (the US Federal Reserve) and the economic outlook later in the year, some market participants are taking a little bit off the table as the month turns,” said Adam Button, senior analyst. Currencies at ForexLive.
The debt ceiling deal is due to face its first test in Congress later on Tuesday.
“It seems to be a win-win in almost any scenario for the dollar right now,” said Jane Foley, head of foreign exchange strategy at Rabobank.
She said attention is shifting to whether the Fed will raise interest rates again, if not in June then possibly in July.
Looking ahead, the market will be closely watching the non-farm payroll reading due on Friday, which can provide a key insight into the strength of the US labor market.
“The job run has been nothing short of amazing and we’re far behind the disappointing jobs,” Button said.
The euro rose last time by 0.17% to $1.0723, after earlier hitting a two-month low, while the pound was last traded at $1.24095, up 0.41% during the day.
In frozen coins, bitcoin was last up 0.12% at $27,783.00, while ethereum was up 0.51% at $1,904.06.
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The coin bid prices at 10:28 am (1428 GMT).
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
Dollar Index 104.0800 104.3100 -0.21% 0.570% +104.5300 +103.8700
EUR/USD 1.0726 USD 1.0706 + 0.18% + 0.09% + 1.0747 USD + 1.0673 USD
USD/JPY 139.8000 140.4300 -0.44% +6.64% +140.9300 +139.5850
EUR/JPY 149.95 150.37 -0.28% +6.87% +150.6200 +149.7600
USD/CHF 0.9035 0.9045 -0.08% -2.27% +0.9084 +0.9015
GBP/USD 1.2410 USD 1.2359 + 0.41% + 2.61% + 1.2446 USD + 1.2328 USD
USD/CAD 1.3611 1.3593 +0.13% +0.46% +1.3612 +1.3569
AUD/USD 0.6521 USD 0.6539 -0.28% -4.34% + 0.6559 USD + 0.6503 USD
EUR/CHF 0.9689 0.9682 +0.07% -2.08% +0.9699 +0.9673
EUR/GBP 0.8642 0.8667 -0.29% -2.30% +0.8673 +0.8629
$0.6047 0.6054 -0.11% -4.76% + $0.6066 + $0.6026
dollars / dollars
Dollar / Norway 11.1810 11.1080 +0.69% +13.97% +11.2120 +11.0790
Euro / Norway 11.9886 11.8923 +0.81% +14.25% +12.0407 +11.8687
Dollar / Sweden 10.8681 10.8055 +0.61% +4.44% +10.8790 +10.7952
Euro / Sweden 11.6529 11.5818 +0.61% +4.51% +11.6644 +11.5803