By Chibuike Oguh and Linda Pasquini
NEW YORK/LONDON (Reuters) -The dollar strengthened against the yen on Friday, hitting a two-week high after the Bank of Japan left interest rates unchanged and said it was in no hurry to raise them again.
The BOJ could afford to spend time monitoring the impact of global economic uncertainties, Governor Kazuo Ueda said at a news conference after the central bank’s move, adding that its monetary policy decision will be based on “ economic, price and financial developments”. The BOJ kept interest rates steady at 0.25%, a move that was widely expected.
The dollar rose to 144.50 yen, reaching its highest level since early September. It was last up 0.92% at 143.92. The euro also strengthened against the yen, gaining 0.93% to 160.59.
“We’re seeing a little bit of consolidation in the markets that drove the dollar-yen move, which has been quite significant in recent days since the Fed,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto, referring to the decision. the Federal Reserve on Wednesday to cut interest rates by half a percentage point.
“The statement may have sounded a little more cautious 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 traded in a choppy manner since the Fed initiated the monetary policy easing cycle.
However, against the dollar, the euro weakened 0.01% to $1.115925. The , which measures the dollar against major currencies, rose slightly to 100.75 and is just above a one-year low.
“There is a feeling in the market that the Bank of Japan does not need to raise rates and we are focusing more on the political situation in Japan,” said Adam Button, chief currency analyst at ForexLive in Toronto.
Markets are implying a nearly 49% chance that the Fed will make another 50 basis point rate cut in November and have priced in a 74.8 basis point rate cut by the end of this year. The Fed’s policy rate is expected to be 2.85% at the end of 2025, which is now considered the Fed’s estimate of the neutral rate.
This mild outlook has boosted hopes for continued US economic growth and led to a major rally in risky assets. Currencies that leveraged global growth and commodity prices also benefited, with the Australian dollar reaching as high as $0.68285. It was last down 0.13% at $0.68060.
“It’s counterintuitive to what we’ve seen in the market, with a big cut in rates by the Fed and the Bank of Japan. I think the message from the dollar-yen is really that the market is feeling better about global interest rates. growth,” said Button.
China unexpectedly left loan interest rates unchanged during the monthly fixing on Friday. Beijing has hinted at other stimulus measures, made possible in part by the Fed’s aggressive easing, which has pushed the dollar to a 16-month low against the yuan.
Major Chinese state banks bought dollars on the local currency market on Friday to prevent the yuan from rising in value too quickly, two people with knowledge of the matter said. The dollar weakened 0.23% to 7.043 against offshore.
The Bank of England kept interest rates unchanged on Thursday, with the governor saying the central bank had to be ‘careful not to cut too quickly or too much’.
The pound rose 0.24% to $1.33180, supported by Friday’s release of strong UK retail data.
Currency bid prices at 20
September 18:46 GMT
Description RIC Last US Close Previous session Pct Change YTD Pct High bid Low bid
Dollar index 100.74 100.67 0.07% -0.62% 101.01 100.41
Euro/dollar 1.1162 1.1162 -0.01% 1.11% $1.1181 $1.1136
Dollar/yen 143.84 142.62 0.9% 2.03% 144.485 141.84
Euro/yen 1.1162 159.19 0.85% 3.16% 161.15 158.43
Dollar/Swiss 0.8506 0.8478 0.35% 1.09% 0.8516 0.8453
Sterling/dollar 1.3314 1.3286 0.22% 4.63% $1.3341 $1.3269
Dollar/Canadian 1.356 1.3557 0.04% 2.31% 1.359 1.3543
Aussie/Dollar 0.6806 0.6815 -0.13% -0.18% $0.6829 $0.6784
Euro/Swiss 0.9494 0.9462 0.34% 2.22% 0.9503 0.9447
Euro/British Pound 0.838 0.8401 -0.25% -3.32% 0.8407 0.8382
New Zealand dollar/dollar 0.6237 0.6242 -0.06% -1.29% $0.6258 0.621
Dollar/Norway 10.4989 10.4814 0.17% 3.59% 10.561 10.4482
Euro/Norway 11.7197 11.699 0.18% 4.42% 11.7702 11.681
Dollar/Sweden 10.1778 10.1512 0.26% 1.1% 10.2309 10.138
Euro/Sweden 11.3604 11.338 0.2% 2.11% 11.3988 11.3326
