Dollar down from 10-month high, but intervention monitoring for yen

29 Sep 2023 , 10:12 AM

As markets moved toward the end of the quarter on Friday, the dollar managed to avoid reaching a 10-month high, giving the yen a little more breathing room at the end of the week amid concerns about intervention.

After recovering overnight, the euro mostly maintained its position, but it was still close to its January low of $1.0482, which if it was breached would be the lowest since December.

After falling as low as 106.020 overnight, the dollar index, which measures the value of the dollar against six other major currencies, was largely unchanged in the Asian morning, on track for an 11th week in a row of advances.

When the Federal Reserve issued a warning last week that it may raise rates further and is likely to leave them high for longer, the dollar rose on predictions that the U.S. economy will stay more resilient to rising interest rates than other economies.

The dollar’s ascent had been supported by U.S. Treasury rates, which dropped from multi-year highs overnight as technical forces intervened to stop their advance.

The U.S. appears to be headed toward a partial government shutdown, which could hinder the publication of economic statistics and provide investors little insight into the state of the economy as markets anticipate the release of important PCE data later on Friday.

The yen is still a hot topic as it trades close to the 150 mark, which is seen to raise the possibility of intervention from Japanese authorities.

The Japanese yen last traded at 149.34 against the US dollar.

According to data released on Friday, core inflation in the capital of Japan decreased in September for the third consecutive month, primarily due to lower gasoline prices. This suggests that cost-push pressures are beginning to peak, which is good news for the fragile economic recovery.

Separate statistics revealed that manufacturing output was unchanged in August, a warning that businesses were suffering from poor global demand and indications of economic weakness in China.

The euro was trading at $1.05625 elsewhere, down 0.04% in Asia thus far after recovering from this week’s multi-month low of $1.0488. Investors will be watching for hints about the strength of the euro zone’s economy in Friday’s CPI data from outside the zone.

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