Around 11:00 a.m., the dollar took 0.17% to 139.20 yen and 0.21% to 1.1597 dollars for one pound.
The dollar took advantage of its safe haven status and the Fed’s determination on Thursday to reach a peak since 1998 once morest the yen and since 2020 once morest the pound. The franc followed suit, gaining ground once morest the European currency and the greenback.
Around 11:00 a.m., the dollar took 0.17% to 139.20 yen and 0.21% to 1.1597 dollars for one pound. But the US currency was losing ground once morest the franc, with $1 trading around 11:12 a.m. at 0.9761 francs (-0.17%).
“Risk currencies remain under pressure once morest the safe-haven dollar as surprisingly strong inflation data and concerns over jumping energy prices, especially in Europe, curb appetite for the investor risk,” says Matthew Ryan, an analyst at Ebury.
As a result, the pound, which had already plunged 4.5% once morest the dollar in August, its worst monthly performance since the end of 2016, is dangerously approaching $1.1412, a threshold below which the currency will be at its most low since 1985.
The yen reached 139.68 yen, a level not seen since 1998, when the currency is usually considered a safe haven. But it is suffering from the very accommodating monetary policy adopted by the Bank of Japan, and by the dependence of the Japanese economy on the health of China.
However, Chinese manufacturing activity collapsed in August, according to an independent index, and the country continues to follow a strict zero Covid strategy despite 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”, comments Lee Hardman, analyst at MUFG.
In this gloomy context, the euro has held up a little better in recent sessions, even if it lost 0.16% to 1.0038 dollars on Thursday. And the single currency also fell once morest the franc, 1 euro being around 11:12 a.m. 0.9795 francs.
“Investors reacted favorably to a series of interventions by European Central Bank officials who defended a 75 basis point hike in the key rate,” notes Mr. Ryan. The ECB will meet on September 8.
