👀 Ones to watch: The MOST undervalued shares to buy right nowSee Undervalued Shares

Dollar ticks higher versus yen, China fears drag on yuan

Published 16/08/2023, 11:25 am
© Reuters. Banknotes of Japanese yen are seen in this illustration picture taken September 22, 2022. REUTERS/Florence Lo/Illustration/file photo
USD/JPY
-

By Hannah Lang

WASHINGTON (Reuters) - The Japanese yen further weakened against the dollar on Wednesday, hovering in a zone that last year triggered intervention, while the yuan slipped to a nine-month low as fears mounted about the extent of China's slowdown.

The yen has hit the key 145 per dollar level for four sessions, which triggered heavy dollar selling by Japanese authorities in September and October last year. It last weakened 0.45% versus the greenback to 146.22 per dollar, after hitting 146.260, a level not seen since November.

Finance Minister Shunichi Suzuki said on Tuesday authorities were not targeting absolute currency levels for intervention.

"Exactly when they'll intervene and at what level, I couldn't tell you, but I would expect it to be relatively soon, because inflation there still looks pretty bad," said Stephen Miran, co-founder at Amberwave Partners.

"Letting the currency continue to do this when the rest of the world has much higher yields has the potential of exacerbating inflation there even further."

Elsewhere in Asia, the yuan touched its lowest level since November in both the onshore and offshore markets as fears mounted about the extent of China's slowdown, falling as low as 7.3397.

That extended Tuesday's decline following Chinese data that missed forecasts and prompted Beijing to deliver unexpected cuts to its key policy rates as authorities there sought to shore up an economy that has rapidly lost steam in recent months.

The Australian dollar, often used as a liquid proxy for the yuan, plumbed nine-month lows in response to the Chinese data. It last fell 0.46% versus the greenback at $0.643.

"I really don't think that the backdrop is conducive for a sustained risk rally at this point," said Bipan Rai, global head of FX strategy at CIBC Capital Markets. "Not only the China data, it's also the fact that we're dealing with tighter monetary conditions globally, and that's going to crimp demand at the margin."

CENTRAL BANK WATCH

The pound was up after data showed British core inflation stayed strong in July, hitting a high of $1.2768 and was last up around 0.18% at $1.2725.

In Britain, core inflation, which strips out volatile energy and food prices, remained at 6.9% in July, flat versus the June reading, and higher than expectations in a Reuters poll for a reading of 6.8%.

The dollar index rose 0.213% at 103.420 after the release of the Federal Reserve's minutes showed central bank officials were divided over the need for more interest rate hikes at their last meeting. The euro was down 0.22% to $1.08795.

The New Zealand dollar, which had fallen to a nine-month low of $0.5932 in early Asian trade, rebounded after the Reserve Bank of New Zealand policy meeting, but last fell 0.27% versus the greenback at $0.594.

The central bank held its cash rate steady as expected on Wednesday, but slightly pushed out when it expects to start cutting borrowing costs to 2025.

"The statement gave a clearly more hawkish tone, likely defying any dovish expectations," said Barclays (LON:BARC) research analyst Shreya Sodhani.

"We think today's more hawkish statement and the governor's press conference suggest that the timing of rate cuts will likely be pushed back a bit."

========================================================

Currency bid prices at 3:00PM (1900 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 103.4200 103.2100 +0.21% -0.068% +103.4500 +102.9400

Euro/Dollar $1.0879 $1.0904 -0.22% +1.54% +$1.0934 +$1.0878

Dollar/Yen 146.2300 145.5700 +0.46% +11.54% +146.2550 +145.3100

Euro/Yen 159.10 158.74 +0.23% +13.40% +159.2500 +158.6400

Dollar/Swiss 0.8798 0.8786 +0.13% -4.86% +0.8814 +0.8775

Sterling/Dollar $1.2724 $1.2702 +0.18% +5.22% +$1.2766 +$1.2689

Dollar/Canadian 1.3534 1.3497 +0.27% -0.11% +1.3539 +1.3476

Aussie/Dollar $0.6426 $0.6456 -0.46% -5.73% +$0.6481 +$0.6423

Euro/Swiss 0.9570 0.9579 -0.09% -3.28% +0.9611 +0.9567

Euro/Sterling 0.8548 0.8583 -0.41% -3.35% +0.8593 +0.8547

NZ $0.5934 $0.5951 -0.27% -6.53% +$0.5993 +$0.5932

Dollar/Dollar

Dollar/Norway 10.6090 10.5370 +0.70% +8.12% +10.6120 +10.5010

Euro/Norway 11.5395 11.4852 +0.47% +9.97% +11.5567 +11.4425

© Reuters. FILE PHOTO: Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009.  REUTERS/Rick Wilking/File Photo

Dollar/Sweden 10.9182 10.8523 +0.33% +4.90% +10.9300 +10.8259

Euro/Sweden 11.8743 11.8354 +0.33% +6.50% +11.8913 +11.8260

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.