Around 7:40 p.m., the Japanese currency dropped 0.71% once morest the greenback, at 116.16 yen to the dollar. Earlier, it had retreated to 116.34 yen, for the first time since January 11, 2017.
The US dollar rose once morest the yen on Tuesday to its highest level in five years, on the back of rising US bond rates.
Around 6:40 p.m. GMT, the Japanese currency dropped 0.71% once morest the greenback, at 116.16 yen to the dollar. Earlier, it had retreated to 116.34 yen, for the first time since January 11, 2017.
“10-year rates are taking off in the United States,” noted Matthew Weller, head of research for Forex.com. “And when you look at different currencies, ten-year rates have the strongest correlation with the yen.”
The benchmark rate for 10-year US government bonds fell, between Friday and Tuesday, from 1.48% to 1.68%, an unusual inflection in a market where daily variations are generally a few basis points. (0.01 percentage point).
Even if inflation accelerated in Japan at the end of the year, it remains much lower (+ 0.8% over one year in November) than the levels observed in the United States (+ 5.7% also in November for the PCE index).
At its last meeting, in mid-December, the Bank of Japan kept its main key rate unchanged, at -0.1%, and kept an ultra-accommodating speech, while the American Central Bank (Fed) opened the door to several rate hikes in 2022.
The cavalcade of the dollar once morest the yen is more generally an illustration of a renewed taste for risk, which penalizes the yen and the Swiss franc.
This is what brought the pound sterling to touch 1.20 euro, at 1.1996, a high for almost two years (February 19, 2020).
The most closely followed parity in the market, the euro / dollar has continued to move within a narrow range for a month and a half.
“We’re going to see a breakup at some point, as traders come back” to work following the holiday season, Matthew Weller predicted.
For him, the series of US macroeconomic indicators that will fall over the next ten days, including the monthly employment report and the CPI inflation index, might offer an opening to the “greenback” to gain height once morest to the euro.
