Japan's top currency ambassador warned against speculators weakening the yen on Monday, while the dollar index slipped from a one-month high achieved Friday.
In the latest warning about the currency's "big slide" versus the dollar, Japan's vice finance minister for foreign affairs, Masato Kanda, said currency weakness did not reflect fundamentals.
“He’s clearly putting traders on alert for signs of intervention,” said Toronto Corpay chief market strategist Karl Schamotta. The yen couldn't maintain advances. The dollar was up 0.03% at 151.47 yen, slightly below Friday's four-month high of 151.86. In October 2022, the Japanese yen hit 151.94 per dollar, its worst level in 32 years.
He said, “Implied volatility does continue to grind lower across most major currencies so this is a supportive environment for the carry trade - we should continue to see speculators borrow in yen and other low yielders and invest in the emerging market high yielders, which could continue to put downward pressure on the yen.”
The Japanese yen fell when the Bank of Japan raised interest rates last week. China's yuan rose to 7.2525 in the offshore market on suspicion of state-owned banks selling dollars and strong central bank guidance.
At 7.2810, it hit its lowest level in four months. The Chinese currency has been pushed by market expectations of more monetary easing to support the world's second-largest economy. The dollar index lost 0.19% to 104.23 after reaching 104.49 on Friday, its highest level since Feb. 16.
Despite higher inflation in January and February, Federal Reserve Chair Jerome Powell stated last week that rate reduction this year are still on pace.However, Atlanta Fed President Raphael Bostic is concerned about continuing inflation and stronger-than-expected economic indicators. On Friday, Bostic predicted one quarter-point interest rate drop this year instead of two.
After the Swiss National Bank became the first major central bank to lower borrowing costs last week and BoE Governor Andrew Bailey told the Financial Times that rate cuts "were in play" this year, bets on a June rate cut by the ECB and BoE have increased significantly. Australian dollars rose 0.37% vs U.S. dollars to $0.654. Bitcoin climbed over 6% to $70,987.49, its highest since March 15. It is below its March 14 record high of $73,803.25.
follow for more updates