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© Reuters
By Peter Nurse
Investing.com – The US dollar soars at the start of trading in Europe on Thursday, hitting a new 24-year high against the yen, after aggressively cut Federal Reserve interest rate forecasts contrasted with the Bank of Japan’s cautious stance.
At 9:55 AM ET, the , which tracks this currency against a basket of six other majors, is up 1% at 111.460, having hit the 111.79 level for the first time since mid 2002.
He raised interest rates by 75 basis points on Wednesday, as expected, but also signaled that his key interest rates would rise 4.4% by the end of the year and peak with a 4.6% rise to end of 2023.
This suggests that interest rates will rise and remain elevated for longer than the markets had anticipated.
This strengthening of the dollar was especially manifested against the yen after the decision to keep interest rates at ultra-low levels and its cautious stance.
The pair posted a 1.1% gain to the 145.56 level, breaching the key 145 level and posting its highest level since August 1998. This move brings into play the 146.78 level, recorded earlier of a joint move by Japan and the United States to support the yen in 1998.
Japanese authorities have been mumbling about intervening, given the yen’s 20% drop against the dollar this year. This continued on Thursday, when Masato Kanda, deputy finance minister for international affairs, said that Japan had not yet intervened in the foreign exchange market, but would “surely” do so when necessary.
The pair is down 0.2% to the 0.9817 level, just above fresh 20-year lows hit at 0.9809; The single currency has already been weighed down by Russian President Vladimir Putin’s move on Wednesday to mobilize part of the country’s 2 million-strong military reserve, raising political temperatures in the region.
The pair is down 0.3% to the 1.1231 level, just above fresh 37-year lows at 1.1221, pending the Bank of England’s monetary policy announcement.
Everything indicates that the Bank of England will raise interest rates for the sixth time in a row later this day, with a rise of 75 basis points to match the move of the Fed, the market favorite.
The highly risk-sensitive was down 0.7% to 0.6584, its lowest since mid-2020, while the was up 0.6% to 7.0899, hitting lows of more than two years despite the strong setting of the daily midpoint by the People’s Bank of China.
The pair is down 0.1% to the 0.9653 level as all indications are that he will also hike interest rates aggressively this Thursday, likely ending the decade-long experiment of negative interest rate policy.
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