SINGAPORE (Reuters) – The Japanese yen traded near a five-month low against the dollar on Monday, supported by rising U.S. yields, as thin year-end liquidity kept most currencies in a narrow range. .
The yen was trading at 157.71, with only the risk of Japanese intervention preventing it from retesting the 160 yen level last seen in July.
The dollar index against its main rival was flat at 107.98.
The euro is at $1.0429, not far from its recent lows and in a holding pattern in holiday trading. The currency is expected to depreciate by about 5.5% against the dollar over the calendar year.
Rising U.S. Treasury yields have been a tailwind for the dollar, with the benchmark 10-year Treasury note hitting its highest in more than seven months last week. The yield was hovering around that level at 4.625% on Monday.
Chris Weston, head of research at Australian online brokerage firm Pepperstone, said: “Despite paid forecasters almost uniformly calling for a weak dollar in 2024, the dollar has weakened in all major currencies. “In contrast, we are likely to end the year at a high price.”
The dollar index rose 2.3% in the same month, bringing the year-to-date rate of increase to 6.6%.
Both have risen in the past three months, supported by expectations that President-elect Donald Trump's policies such as deregulation, tax cuts, higher tariffs and tougher immigration will boost growth and inflation, keeping U.S. yields rising. did.
The dollar has appreciated by 10 yen since Dec. 3, with much of the Japanese currency's decline following the U.S. Federal Reserve's Dec. 18 message warning of future interest rate cuts. It is.
These views have weighed on the yen, which hit its lowest level since July 17 last week at 158.09 yen to the dollar, down 10.6% since the start of the year.
On Friday, a summary of opinions from the Bank of Japan's December policy meeting showed some policymakers are growing confident of an impending rate hike, with Japan's central bank also increasing its monthly bond purchases. The stock has broken out of this low price as a result of the reduction in
Still, Japan's yields remain noticeably low, and recent comments cast doubt on the Bank of Japan's commitment to raising rates. The Bank of Japan kept interest rates unchanged at 0.25% at this month's meeting, and Governor Kazuo Ueda said the central bank was reviewing further data on next year's wage momentum and the clarity of economic policy from the incoming U.S. administration.
A Reuters poll conducted earlier this month showed the Bank of Japan could raise interest rates to 0.50% by the end of March, with interest rate markets pricing in only a 42% chance of a rate hike in January. Not there.
Pepperstone's Weston said dollar buying continues to dominate dollar/yen trading.
