SINGAPORE — The yen was headed for its
worst week in two years on Friday, pummeled by Japan’s rising
import costs and low interest rates, while commodity currencies
were set for a second consecutive weekly gain on the dollar as
export prices remain elevated.
The euro has been slightly softer this week and
was pinned at $1.1005 by concern that conflict in Ukraine will
hurt Europe’s economy by raising energy and food costs.
Australia is an exporter of both and rising prices have
helped the local dollar to a second weekly rise of more than 1%
in a row. The Aussie was last steady at $0.7508, just
below an overnight four-month high of $0.7527.
The yen, by contrast, is breaking down and has
shed 2.6% against the greenback for the week. It has fallen past
the psychological 120-per-dollar barrier and, at 122.44, is
eyeing a test of major resistance around 123.70.
It has lost nearly 6% through March and been smoked even
harder on crosses, losing some 8% against a resurgent Aussie in
just eight sessions.
The latest leg of the tumble was triggered by hawkish
remarks from Federal Reserve Chair Jerome Powell this week, and
a subsequent rip higher in US yields.
The Bank of Japan (BOJ) has also stuck, by contrast, to a
dovish tone, though some traders are starting to think that, at
a six-year low, the yen is plumbing some uncomfortable depths.
“One thing to watch for in dollar/yen is pushback from
policymakers in Japan,” said Brent Donnelly, trader and
president at analytics firm Spectra Markets.
“I’m not sure we’re quite there yet, but the 123.50/125.00
level is almost certain to attract some attention and generate
headlines from either PM (Fumio) Kishida or FinMin
(Shunichi) Suzuki,” he said.
“Pushback could also come from BoJ (Governor Haruhiko)
The bond market is also putting policymakers between a rock
and a hard place by bringing on a challenge to yield curve
control, which if defended could further weaken the yen.
The yield on 10-year Japanese government bonds
hit 0.235% on Friday, close to its upper limit of
Inflation is yet another pressure point, and core consumer
prices in Tokyo have logged their fastest annual increase in
more than two years this month, data showed on Friday.
Elsewhere gains in commodity prices have supported the New
Zealand dollar, though it has run into stiff resistance
just short of $0.70 and was last at $0.6964.
Sterling hovered at $1.3190 as traders weigh a
cautiously dovish outlook from the Bank of England against
February data that showed higher-than-expected inflation.
Russia’s rouble traded firmly in Moscow
overnight following Russian President Vladimir Putin’s vow to
start selling gas to “unfriendly” countries in roubles, but it
handed back some gains in thin offshore trade.
It was last at 102.00 per dollar.
Currency bid prices at 0034 GMT
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
Euro/Dollar $1.1009 $1.0998 +0.10% -3.16% +1.1011 +1.0995
Dollar/Yen 122.1400 122.3150 +0.09% +0.00% +122.4300 +122.3500
Dollar/Swiss 0.9281 0.9301 -0.19% +1.77% +0.9302 +0.9279
Sterling/Dollar 1.3193 1.3188 +0.02% -2.47% +1.3198 +1.3189
Dollar/Canadian 1.2536 1.2526 +0.09% -0.84% +1.2538 +1.2518
Aussie/Dollar 0.7510 0.7514 -0.04% +3.32% +0.7518 +0.7504
NZ 0.6964 0.6965 +0.01% +1.76% +0.6966 +0.6958
Tokyo Forex market info from BOJ
(Reporting by Tom Westbrook. Editing by Sam Holmes.)