SINGAPORE- The dollar flirted with the psychological threshold of 150 yen on Tuesday and held broadly steady ahead of a key reading on US inflation due later in the day, while bitcoin hovered around the $50,000 mark for a second day running.
Trading was largely subdued early in Asia with markets in China and Hong Kong still closed for the Lunar New Year holidays and as traders stayed on guard ahead of Tuesday’s release of consumer prices data in the world’s largest economy.
The greenback last bought 149.39 yen edging higher toward the closely-watched 150 level that analysts said would likely trigger further jawboning from Japanese officials in an attempt to support the currency.
The yen, which has already tumbled more than 5 percent against the dollar year-to-date, is under persistent pressure as investors pare back their expectations of the scale and pace of the Federal Reserve’s easing cycle. The yen bears are also being emboldened on signs the Bank of Japan will resist aggressively hiking rates even if it exits negative interest rates this year as markets are wagering.
“It is a bit of a yield story. Yields in the US are around their highs for 2024, so that’s certainly helped dollar/yen,” said Tony Sycamore, a market analyst at IG.
“It’s also being supported by carry. With volatility so low and… for 2024, the markets have been pretty happy to add risk to their portfolios, and the carry trade is certainly part of that, which supports dollar/yen because of the yield differential.”
Elsewhere, the euro edged 0.03 percent lower to $1.0768, while sterling fell 0.07 percent to $1.2620.
The Australian dollar likewise dipped 0.08 percent to $0.6526. – Reuters