The Yen Has Reached a 24-Year Low

The dollar climbed broadly on Thursday, especially against the yen. Meantime, investors braced for higher US interest rates while anticipating Japanese anchoring rates to remain unchanged for the foreseeable future.

In early Asia trade, the dollar hit a 24-year high of 129.58 against the yen, up nearly 0.4% from the previous day’s closing.

On the strength of robust economic statistics, expectations for a 75-basis-point rate hike in the United States at next month’s Federal Reserve meeting are rising, with Fed funds futures last indicating a 72% possibility of such an increase. The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.3% drop in holdings to 972.37 tons on Wednesday.

After plunging to a two-year low, spot silver fell 0.8% to $17.73 per ounce. Platinum fell 0.9% to $828.24, while palladium fell 0.6% to $2,112.09.

Currencies

The dollar/yen should burst through 140 before September. Sterling sank 0.4% to a fresh 2-1/2 year low of $1.1576. The euro dipped 0.3% but remained above parity at $1.1122, as high inflation fuels raised bets in Europe.

According to figures released on Wednesday, Eurozone inflation hit a new high of 9.11% in August, bolstering the argument for more large European Central Bank rate hikes to contain inflation.

Markets have put in approximately a 41% possibility that the ECB will raise rates by 75 basis points next week, despite the odds of a harsh recession rising alongside petrol prices. In early Asia trade, the US dollar index, which measures the greenback against a basket of currencies, was up 0.12% to 108.99, not far from its two-decade high of 119.48 set on Monday.

Treasury yields in the United States increased in lockstep. The two-year Treasury yield was up at 3.512%, the highest since late 2007. The risky Australian and New Zealand currencies were under pressure, with the Aussie down 0.31% at $0.6721 and the Kiwi down 0.3% at $0.6111.