The Dollar index climbed 0.80% to 109.566 points, a new high for twenty years.
The yen plunged Thursday to hit a 24-year low once morest the dollar, which was taking advantage of its safe haven status in a worried market, also jumping once morest the euro and the pound.
The Japanese currency, which is also suffering from the ultra-accommodating policy of the Bank of Japan (BoJ), lost 0.76% to 140.02 yen around 6:25 p.m. GMT, following having fallen to 140.22 yen, a plus. low since 1998.
The fall of the yen, which has melted by more than 20% for a year, is attributed by traders to Japanese monetary policy, which remains very flexible and “to the differential of US (bond) yields”, according to Joe Manimbo, of Convera Financial Services.
Unlike the United States and Europe, where inflation is soaring and has even exceeded 10% in the United Kingdom, price increases in Japan reached 2.4% year on year in July, quite close to 2% target of the major central banks, encouraging the BoJ to wait and see.
But the melting of the yen might push the institution to act: “previously, when the Bank of Japan intervened to buy yen, it was around these levels”, explained to AFP David Forrester, in charge of the exchanges of the Credit Agricole in Hong Kong.
“Inflation in Japan is accelerating and spreading to sectors other than food and energy”, two causes of price increases linked to the war in Ukraine and over which central banks have little power, notes M Forrester.
This more generalized price increase should “push the BoJ to change its posture a bit”, he believes.
The Bank of Japan’s wait-and-see attitude contrasts with the firm line of the US Federal Reserve (Fed), which has repeatedly indicated that its rate hikes will continue to curb inflation.
Euro and pound in trouble
The dollar “started September with a fresh start and new highs,” said Joe Manimbo. “The same cocktail of fears over interest rate hikes and high inflation pushed up yields on Treasuries,” which was pulling the greenback, the analyst said.
The Dollar index, which measures the greenback once morest major currencies, climbed 0.80% to 109.566 points, a new high for twenty years.
“Comments last week from Federal Reserve Chairman Jerome Powell, who promised quick action to control inflation without worrying regarding the effect on the US economy,” benefit the dollar, commented for their part. OFX analysts.
The markets were also worried regarding seeing the Chinese economy weaken, which is pushing investors towards the dollar, a safe haven.
Chinese manufacturing activity collapsed in August, according to an independent index, and the country continues to follow a strict zero Covid strategy despite having a much lower number of contaminations than the rest of the world.
New confinements “shower expectations on the strength of the economic rebound in the second half of the year”, judged Lee Hardman, analyst at MUFG.
The other major currencies did little better: the euro lost 0.95% to 0.9958 dollars, approaching its lowest since the end of 2020 reached in August at 0.9901 dollars.
The British pound briefly fell below $1.15 for the first time since March 2020, and is moving dangerously close to $1.1412, a threshold below which it would fall to its lowest since 1985.
Thursday class Wednesday class
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6:35 PM GMT 9:00 PM GMT
EUR/USD 0,9958 1,0054
EUR/JPY 139.43 139.71
EUR/CHF 0.9771 0.9828
EUR/GBP 0,8621 0,8650
USD/JPY 140,02 138,96
USD/CHF 0,9812 0,9775
GBP/USD 1,1551 1,1622
