By Tom Westbrook
SINGAPORE, March 22 (Reuters) - The U.S. dollar was set
for a second week of broad gains on Friday, with even a rate
hike in Japan unable to dislodge it, as investors figure U.S.
rates are high and not falling yet.
The Swiss National Bank delivered the biggest surprise of a
week crammed with central bank meetings, cutting its main
interest rate and citing the strength of the franc as a reason.
The franc, which in real terms has been rising for
years, dropped more than 1% overnight to 0.8894 per dollar, its
weakest in four months, and slid to a nine-month low on the euro
nudging it closer to parity.
The Bank of Japan announced an historic shift out of
negative short-term rates and longer-run yield caps, but it was
so well telegraphed that the yen fell on the news and
was last a whisker from multi-year lows at 151.63 per dollar.
The U.S. Federal Reserve left its funds rate on hold between
5.25% and 5.5% this week and stuck with projections for three
cuts by year's end.
But it said it will not start moving until it has more
confidence that inflation is sustainably falling toward 2%.
Market expectations for U.S. rate cuts increased after that
but only very slightly. About 80 basis points of cuts are now
priced in for this year - much lower than the 160 or so that had
been priced in at the start of the year.
"With this tweaking and pricing out of the number of Fed
cuts, we see the dollar support slowly beginning to come back
into the picture," said Patrick Hu, G10 currency trader at Citi.
"This is one of the key factors in why dollar/yen did not
fall but it actually started to trickle higher."
Dollar/yen is up 1.6% this week and near levels that
prompted Japanese intervention in 2022, which has investors
nervous but also looking for other currencies to buy and pocket
the "carry", or difference between interest rates.
Euro/yen hit its highest since 2008 this week at
165.37 and the Aussie broke above 100 yen for the
first time since 2014.
Against the dollar the euro has slipped about 0.2%
this week into middle of a range it has held for a year at
$1.0862.
Sterling fell overnight after the Bank of England
left interest rates unchanged, this time backed by the two
hawkish committee members who'd previously voted for a hike.
For the week sterling is down 0.6% at $1.2661.
The Australian and New Zealand dollars moved in opposite
directions this week. Thursday data showed New Zealand slipped
into a technical recession, while Australian jobs surged ahead.
The Aussie/kiwi cross is up 0.8% this week. The
Australian dollar has eked a 0.2% gain on the U.S.
dollar to $0.6572 for the week, while the kiwi has
plumbed four-month lows and lost about 0.6% to $0.6046.
The U.S. dollar index is up for a second week in a
row, climbing 0.5% to 103.94.
Bitcoin is eyeing its sharpest weekly drop since
January as crypto markets have taken a step back from a powerful
rally this week - though it will trade through until Sunday.
It was last at $65,800.
Other morning moves in Asia were slight. The yen had no
major reaction to mixed Japanese inflation data. Retail sales
figures in Britain and Canada are due later in the day.
========================================================
Currency bid prices at 0100 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar
$1.0865 $1.0860 +0.05% +0.00% +1.0868 +1.0861
Dollar/Yen
151.5250 151.6350 -0.07% +0.00% +151.6900 +151.4500
Euro/Yen 164.63 164.63 +0.00% +0.00% +164.7700 +164.5700
Dollar/Swiss
0.8975 0.8977 -0.02% +0.00% +0.8979 +0.8971
Sterling/Dollar
1.2672 1.2660 +0.10% +0.00% +1.2674 +1.2656
Dollar/Canadian
1.3524 1.3530 -0.04% +0.00% +1.3531 +1.3520
Aussie/Dollar
0.6574 0.6569 +0.08% +0.00% +0.6577 +0.6570
NZ
Dollar/Dollar 0.6049 0.6045 +0.07% +0.00% +0.6052 +0.6046
All spots
Tokyo spots
Europe spots
Volatilities
Tokyo Forex market info from BOJ
(Reporting by Tom Westbrook; Editing by Muralikumar
Anantharaman)
Dollar steadfast as investors seek 'carry'
March 22, 2024 at 06:45 am IST
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