Written by Amanda Cooper
LONDON (Reuters) – The dollar edged higher on Wednesday, recouping some of the losses from a fresh bet by the U.S. Federal Reserve to cut interest rates this year, while the yen fell for a third straight day, pushing investment The family continues to be wary of the risk of intervention by Tokyo.
In Europe, the Swedish royal family came under pressure after the central bank cut interest rates and said it expected two more cuts this year, pushing the pound into negative territory ahead of next day’s Bank of England board meeting. Ta.
The yen remained the focus of currency traders’ attention, weakening for the third day in a row and prompting Japanese authorities to issue a stronger warning about the impact of a weaker currency on the economy.
Traders believe Japanese authorities spent about $60 billion last week to support the yen after it hit a 34-year low of around 160 yen against the dollar.
Analysts say any intervention by the Japanese government would only be a temporary respite for the yen, given the wide interest rate differential between Japan and the United States.
“If USD/JPY suddenly rises sharply, I would expect them to enter the market to support the yen. However, if it continues to rise slowly, I doubt they will enter the market. But there are clearly risks,” said Carol Kong, currency strategist at Commonwealth Bank of Australia.
The dollar last rose 0.5% against the yen to 155.47 yen, just shy of last week’s low of 151.86 yen hit in the wake of the meddling allegations.
Fed conquers all
Investors are keeping an eye on the pace and timing of the Fed’s interest rate cuts, which is likely to move currency markets. Latest data showing weaker-than-expected U.S. job creation and the U.S. central bank’s easing bias have strengthened expectations that interest rates are likely to be cut by the end of the year.
The dollar was last up 0.1% against a basket of currencies to $105.48, above its one-month low hit last week.
Meanwhile, European central banks have already begun cutting interest rates. The Swiss National Bank cut interest rates in March ahead of Wednesday’s policy decision by the Swedish National Bank.
The European Central Bank has indicated it intends to cut interest rates in June, assuming the data points in the right direction, with the central bank gradually leveling the path towards its first rate cut.
“What we’re looking at is a number of European Central Bank rate cuts in the coming months, whether it’s June or August. There’s a 50% chance that the Fed will cut rates in September. %, but I think it’s a possibility that it could probably get pushed out,” said Kathleen Brooks, research director at XTB.
“For now, and especially today, the focus is on Europe being the first to cut interest rates, and we’re seeing upward pressure on the dollar,” he said.
The euro was stable at $1.0752. The euro rose 0.2% against Swedish crowns to 11.709 crowns.
The pound fell 0.1% to $1.24995.
Among cryptocurrencies, Bitcoin fell 0.8% to $62,450, its first decline in four days and the longest daily decline so far this year. Ether fell 1.5% to $3,000.
(Additional reporting by Rae Wee in Singapore; Editing by Gerry Doyle, Christina Fincher and Chizu Nomiyama)
