SYDNEY- The yen was pinned near a five-year low on the dollar on Wednesday and nursing losses on other crosses as traders wagered the Bank of Japan would lag a looming wave of global policy tightening as inflation gallops ahead around the world.
The yen tumbled through support around 115.50 per dollar on Tuesday to hit the five-year trough at 116.35. It last sat at 116.15 per dollar. It also dropped through its 200-day moving average to a two-month low of 131.45 per euro and was hovering at 131.06 per euro early in the Asia session.
The yen fell to a more than six-year low against the Swiss franc and a seven-week trough on the Aussie.
“Sharply higher COVID-19 case numbers in the US (and a little higher in China) appear to be primarily boosting supply-chain concerns and fears of higher inflation in the US, rather than boosting growth concerns,” said Nomura economist Andrew Ticehurst.
This has led to a sharp jump in US Treasury yields in the first trading days of the year and the widened gap on Japanese yields – anchored by the central bank – has hurt the yen.
The euro hovered near a two-week low against the dollar at $1.1279. The risk-sensitive Australian and New Zealand dollars also resumed an attempt to rally as fears of Omicron derailing the world’s recovery subsided.
The kiwi last bought $0.6819 and the Aussie $0.7236. Both remain shy of resistance around $0.6857 and $0.7270 respectively. The US dollar index was rangebound at 96.313.
Sterling, meanwhile, has rallied 2.7 percent in a dozen trading days since Dec. 20 as traders also reckon surging Omicron cases in Britain won’t deter the Bank of England from lifting rates. The pound last bought $1.3527. — Reuters
