By Chibuike Ojoh and Linda Pasquini
NEW YORK/LONDON (Reuters) – The dollar rose against the yen on Friday to a two-week high after the Bank of Japan left interest rates unchanged and signaled it was in no rush to raise them again.
Bank of Japan Governor Kazuo Ueda said at a news conference after the central bank’s move that the bank could take some time to study the implications of global economic uncertainty, adding that its decision on monetary policy would be based on “economic, price and financial developments.” The BOJ left interest rates steady at 0.25 percent, a move that had been widely expected.
The dollar rose to 144.50 yen, its highest since early September. It was last up 0.92% at 143.92 yen. The euro also rose 0.93% against the yen to 160.59 yen.
“We’re seeing a bit of consolidation in the markets that have benefited from the dollar’s move against the yen, which has been quite large in the last few days since the Federal Reserve decided on Wednesday to cut interest rates by half a percentage point,” said Sean Osborne, chief foreign exchange strategist at Scotiabank in Toronto.
“The statement may have sounded more dovish than markets would have liked given the assumption that we will see another rate cut from the Bank of Japan before Christmas. I still think that is likely.”
The dollar has been trading volatile since the Federal Reserve began its monetary policy easing cycle.
But against the dollar, the euro was down 0.01 percent at $1.115925. The euro, which measures the greenback’s strength against major currencies, was up slightly at $100.75, just above a one-year low.
“There is a sense in the market that the Bank of Japan does not need to raise interest rates and we are more focused on the political situation in Japan,” said Adam Patton, chief currency analyst at Forex Live in Toronto.
Markets are pricing in a 49% chance of another 50 basis point rate cut by the Fed in November, and have priced in 74.8 basis points of cuts by the end of this year. The Fed’s key rate is expected to be 2.85% by the end of 2025, which is now believed to be the Fed’s neutral rate estimate.
The dovish outlook has boosted hopes for continued U.S. economic growth and sparked a sharp rally in riskier assets. Currencies linked to global growth and commodity prices also benefited, with the Australian dollar hitting $0.68285. It was last down 0.13% at $0.68060.
“This is in contrast to what we have seen in the market, with the Fed cutting heavily and the Bank of Japan keeping interest rates on hold,” Patton said. “I think the real message from the dollar and the yen is that the market is feeling better about global growth.”
China unexpectedly left its benchmark lending rate unchanged at a monthly fix on Friday. Beijing was hinting at further stimulus measures, partly enabling it to ease the Federal Reserve’s aggressive monetary policy that has pushed the dollar to a 16-month low against the yuan.
Major state-owned Chinese banks were seen buying dollars in the onshore foreign exchange market on Friday to prevent the yuan from rising too quickly, two people familiar with the matter said. The dollar fell 0.23% to 7.043 against the offshore currency.
The Bank of England left interest rates unchanged on Thursday, with its governor saying the central bank should be “careful not to cut rates too quickly or by too much”.
The pound rose 0.24% to $1.33180, supported by the release of strong UK retail sales data on Friday.
Bidding prices for the currency at 20
September 06:46 PM GMT
Description RIC Last US Close Previous Session Percentage Change To Date Percentage Highest Bid Lowest Bid
Dollar Index 100.74 100.67 0.07% -0.62% 101.01 100.41
EUR/USD 1.1162 1.1162 -0.01% 1.11% $1.1181 $1.1136
USD/JPY 143.84 142.62 0.9% 2.03% 144.485 141.84
EUR/JPY 1.1162 159.19 0.85% 3.16% 161.15 158.43
USD/CHF 0.8506 0.8478 0.35% 1.09% 0.8516 0.8453
GBP/USD 1.3314 1.3286 0.22% 4.63% $1.3341 $1.3269
USD/CAD 1.356 1.3557 0.04% 2.31% 1.359 1.3543
AUD/USD 0.6806 0.6815 -0.13% -0.18% $0.6829 $0.6784
EUR/CHF 0.9494 0.9462 0.34% 2.22% 0.9503 0.9447
EUR/GBP 0.838 0.8401 -0.25% -3.32% 0.8407 0.8382
NZD/USD 0.6237 0.6242 -0.06% -1.29% 0.6258 0.621
USD/NOR 10.4989 10.4814 0.17% 3.59% 10.561 10.4482
EUR/NOR 11.7197 11.699 0.18% 4.42% 11.7702 11.681
USD/SEK 10.1778 10.1512 0.26% 1.1% 10.2309 10.138
EUR/SED 11.3604 11.338 0.2% 2.11% 11.3988 11.3326
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