Authors: Chibuike Oguh and Linda Pasquini
NEW YORK/LONDON (Reuters) – The dollar rose against the yen on Friday to a two-week high after the Bank of Japan left interest rates unchanged and suggested it was in no hurry to raise them again.
The BOJ can afford to take its time to monitor the effects of global economic uncertainty, Governor Kazuo Ueda told a news conference after the central bank’s move, adding that its monetary policy decision would be based on “economic, price and financial developments.” The BOJ kept interest rates steady at 0.25%, which was widely expected.
The dollar rose to 144.50 yen, its highest level since early September. It was last up 0.92% at 143.92. The euro also strengthened against the yen, gaining 0.93% to 160.59.
“We’re seeing some consolidation in markets that have seen the dollar move against the yen, which has been quite significant over the last few days since the Fed’s decision,” said Shaun Osborne, chief currency strategist at Scotiabank in Toronto, referring to the Fed’s decision on Wednesday to cut interest rates by half a percentage point.
“The statement was perhaps a bit more cautious than markets would have liked, given the assumption that we will see another rate cut from the Bank of Japan before Christmas. I still think that is likely.”
The dollar has been volatile since the Fed began its easing cycle.
The euro, however, fell 0.01% against the dollar to $1.115925. The rate, which measures the U.S. currency’s value against major currencies, rose slightly to 100.75 and narrowly exceeded a one-year low.
“There is a sense in the market that the Bank of Japan does not need to raise interest rates, and we are also paying more attention to the political situation in Japan,” said Adam Button, chief currency analyst at ForexLive in Toronto.
Markets are indicating a nearly 49% chance that the Fed will cut rates by another 50 basis points in November and have priced in 74.8 basis points of cuts by the end of this year. The Fed’s benchmark rate is expected to end in 2025 at 2.85%, which is currently considered the Fed’s neutral rate estimate.
The dovish outlook boosted hopes for continued US economic growth and sparked a significant rally in risk assets. Currencies leveraged to global growth and commodity prices also benefited, with the Australian dollar hitting $0.68285. It was last down 0.13% at $0.68060.
“That’s contrary to what we’ve seen in the market, with the big cut in interest rates from the Fed and the Bank of Japan. I think the message from the dollar-yen is that the market is feeling better about global growth,” Button said.
China unexpectedly left benchmark lending rates unchanged Friday at its monthly rate-setting. Beijing has hinted at other stimulus measures, thanks in part to aggressive monetary easing by the Fed that has pushed the dollar to a 16-month low against the yuan.
Two people familiar with the matter said China’s major state-owned banks were buying dollars in the onshore spot currency market on Friday to prevent the yuan from rising too quickly. The greenback fell 0.23% to 7.043 against the offshore currency.
The Bank of England kept interest rates on hold on Thursday, with its governor saying the central bank must be “careful not to cut them too quickly or too much”.
The pound rose 0.24% to $1.33180 on the back of powerful British retail sales data released on Friday.
Currency offer prices at 20
September 06:46 pm GMT
RIC Description Last US Close Previous Session YTD Percent Change Percent Highest Bid Lowest Bid
Dollar Index 100.74 100.67 0.07% -0.62% 101.01 100.41
Euro/Dollar 1.1162 1.1162 -0.01% 1.11% 1.1181 $ 1.1136 $
Dollar/Yen 143.84 142.62 0.9% 2.03% 144.485 141.84
Euro/Yen 1.1162 159.19 0.85% 3.16% 161.15 158.43
Dollar/Swiss 0.8506 0.8478 0.35% 1.09% 0.8516 0.8453
British Pound/Dollar 1.3314 1.3286 0.22% 4.63% 1.3341 $ 1.3269
Canadian Dollar 1.356 1.3557 0.04% 2.31% 1.359 1.3543
Australian/Dollar 0.6806 0.6815 -0.13% -0.18% $0.6829 $0.6784
Euro/Switzerland 0.9494 0.9462 0.34% 2.22% 0.9503 0.9447
Euro/British Pound 0.838 0.8401 -0.25% -3.32% 0.8407 0.8382
New Zealand dollar/dollar 0.6237 0.6242 -0.06% -1.29% 0.6258 0.621
Dollar/Norway 10.4989 10.4814 0.17% 3.59% 10.561 10.4482
Euro/Norway 11.7197 11.699 0.18% 4.42% 11.7702 11.681
Dollar/Sweden 10.1778 10.1512 0.26% 1.1% 10.2309 10.138
Euro/Sweden 11.3604 11.338 0.2% 2.11% 11.3988 11.3326
