The dollar at its highest in six years against the yen but falls against the pound

Against the Japanese currency, the dollar rose 0.90% to 120.55 yen, following hitting a six-year high of 121.03 yen.

The US dollar rose to its highest since early 2016 once morest the yen, galvanized by the determination of the US Federal Reserve (Fed), but fell back once morest the British pound.

A sign of the markets’ hesitation, the Dollar index, which compares the greenback to a basket of other major currencies, was in equilibrium (+0.01% to 98.50 points).

Against the yen, the dollar took however 0.90% to 120.55 yen, following reaching a high for six years at 121.03 yen.

After raising US policy rates for the first time since the start of the COVID-19 pandemic and signaling his desire to see them rise rapidly as the year goes on last week, Fed chief Jerome Powell pushed the nail Monday night.

“If we determine that we need to tighten beyond” the measure considered neutral of 2% or 2.5%, “we will also do so,” he stressed.

The Fed is pushed into action by inflation, the highest in 40 years in the United States. The Bank of Japan, for its part, is facing an acceleration in inflation, but much more moderate, and is maintaining its ultra-accommodating policy for the time being.

“The yen and its negative rates appear more than ever as an unattractive currency,” comments Guillaume Dejean, analyst at Western Union.

The euro, on the other hand, remained in equilibrium at 1.1016 dollars, the single European currency having recently been more sensitive to progress in the negotiations between Ukraine and Russia than to monetary policy.

“The biggest possible downside for the dollar might be Thursday’s NATO meeting,” said FXTM analyst Lukman Otunuga.

“If this meeting ends on a positive note, with possible progress on the negotiations, it might weigh on the dollar”, he adds.

The British pound, meanwhile, jumped 0.65% to 1.3254 dollars, (+0.65% to 83.11 pence for one euro once morest the single European currency), pending a speech budget of Chancellor of the Exchequer Rishi Sunak on Wednesday.

“This can be explained by remarks by Mr Sunak, who said that the United Kingdom must adopt a responsible approach to public finances”, commented the analysts of OFX.