Hawkish Fedspeak keeps dollar king, yen slumps to 20-year low

div classBodysc17zpet90 cdBBJodivpBy Kevin Buckland

TOKYO Reuters – The dollar rose to a twodecade peak against the yen and kept close to a twoyear high to the euro on Friday, as more hawkish comments from Federal Reserve officials reinforced expectations for faster U.S. policy tightening.pdivdivdiv classBodysc17zpet90 cdBBJodiv

The greenback was 0.43 higher at 126.40 yen after earlier reaching 126.56 for the first time since May 2002.

The euro slipped 0.14 to 1.0812, heading back toward the overnight low of 1.0785, a level unseen since April 2020.

New York Fed President John Williams said on Thursday that a halfpoint rate rise next month was “a very reasonable option,” in a further sign that even more cautious policymakers are on board with faster monetary tightening.

pBy contrast, European Central Bank President Christine Lagarde said around the same time that there was no clear timeframe for when ECB rates would start to rise, adding that it could be weeks or even several months after the central bank winds down its stimulus scheme in the third quarter.

“Williams spoke openly of the need to move rates more swiftly and above neutral,” further buoying the dollar, Tim Riddell, a macro strategist at Westpac wrote in a client note.p

By contrast, the ECB “revealed a more dovish reaction function to the inflation news than the market had discounted,” he said.

U.S. Treasury yields resumed their climb overnight, following a twoday decline, further buoying the greenback. Treasuries did not trade in Tokyo on Friday because of the Good Friday market holiday in the United States, as well as other regions including Australia, Hong Hong and the U.K. [US]

The dollar index rose 0.08 to 100.48, edging back toward the twoyear high of 100.78 reached on Thursday.

For the week, it has climbed 0.64, while the euro has dropped 0.58.

Against the yen, the dollar has climbed 1.71, heading for a sixth straight winning week.

Japanese Finance Minister Shunichi Suzuki warned on Tuesday that the government is watching yen moves and their impact on the economy “with a sense of urgency”.

“Despite repeated verbal intervention over the past few weeks from Japanese policymakers, USDJPY has continued to rise alongside higher U.S. yields,” Goldman Sachs analysts wrote in a note.p

“The odds of direct FX intervention are rising, in our view,” and “should increase significantly once USDJPY enters the 127130 range,” they said.

Meanwhile, the Australian dollar hovered near a threeweek low of 0.7392 reached on Wednesday, last trading down 0.2 on the day at 0.7404.

Cryptocurrency bitcoin continued to consolidate close to a fourweek low of 39,218.15 reached on Monday, last changing hands at 40,005.50.

“Bitcoin is in the danger zone as risky assets are tumbling as the bond market selloff resumes,” Edward Moya, a senior market analyst at OANDA, wrote in a note.

“If it breaks below 38,000, it could get ugly real fast.”

pp Reporting by Kevin Buckland Editing by Simon CameronMoore

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