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U.S. dollar dropped while Japanese Yen hit a high on Thursday

 

The greenback plunged to three month-lows against the British Pound and Japanese yen today. Fed Chair Jerome Powell stated on Wednesday that the central bank would be able to slow U.S. rate hikes as soon as December. This news weakened the dollar while supporting other currencies. However, the euro couldn’t overcome a major resistance level.

This year, the U.S. dollar rallied thanks to the aggressive rate increases from the Federal Reserve. Higher U.S. benchmark yields, along with concerns that the central bank would push the U.S. economy into recession, also supported the safe-haven greenback. However, Powell’s new comments about slowing down hikes to balance the risks weighed on the currency. The Fed Chair also added that controlling high inflation would require holding policy at a restrictive level for the short term.

On Thursday, the Japanese Yen jumped as much as 1.64%, hitting its highest level since August 23. The USD/JPY pair exchanged hands at 135.85. However, the dollar recovered soon, rebounding to 136.26. The sterling also surged forward by 0.88% to $1.2164, reaching its highest peak since August 12. It traded around its 200-day moving average at last.

Investors are waiting for U.S. personal consumption expenditure price index due on Thursday. The latter might offer further insights into the inflation situation, as well as the Fed’s plans for the rate hikes. U.S. jobs data will come out on Friday.

Meanwhile, the euro gained modestly, climbing up by 0.38% to $1.04485. Still, the currency couldn’t cross the $1.05 level. The greenback plummeted against most other G10 currencies today. It shaved off 0.2% against the Swiss franc. At the same time, the Australian dollar jumped to $0.684, its highest level since September 13. The New Zealand dollar also skyrocketed to $0.636, the highest peak since August 17.

 

What about the Chinese Yuan and EM currencies? 

The Chinese yuan fluctuated in offshore trading on Thursday. Media reported that Beijing plans to allow some citizens to home-quarantine. The dollar traded 0.3% higher at 7.068 yuan after tumbling as much as 0.3% to 7.0256. On Wednesday, cities Chongqing and Guangzhou announced an easing of coronavirus curbs.

On Thursday, Indonesia’s rupiah rallied by more than 1%. However, investors are concerned about possible rate hikes as inflation is still above the central bank’s target range. The rupiah gained as much as 1.3% today, experiencing its best day in almost three weeks.

Meantime, Malaysia’s ringgit also jumped to a more than five-month peak against the greenback, adding 1%. Thailand’s baht soared by 0.5%, hitting its highest level since June 29.

 



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