The dollar approached its highest levels in 3 months against other major currencies on Wednesday, after data unexpectedly showing a rise in inflation in the United States led to a decline in bets that the Federal Reserve (the US central bank) would begin lowering interest rates.
The dollar exceeded the 150 yen level for the first time since November, prompting Japan’s chief currency official, Masato Kanda, to threaten intervention if the yen’s “rapid” and “extremely dangerous” declines continue.
The price of the yen against the dollar is affected by long-term US Treasury bond yields, which rose overnight, before recording a new peak in two and a half months at 4.332% today, Wednesday.
The dollar has increased by about 10 yen since the beginning of this year.
The dollar index – which measures the currency’s performance against 6 major currencies, including the yen, the euro and the British pound – rose to 104.89 points, remaining near the highest level in 3 months that it recorded yesterday, Tuesday, at 104.96.
The euro settled at $1.0701 after falling to its lowest level in 3 months at $1.07005 at the end of yesterday’s trading.
The British pound recorded $1.2556, after it had fallen about 0.3% yesterday, Tuesday. This was well above recent lows, with strong UK economic data suggesting the Bank of England will be slower than its major peers in cutting interest rates.
The Australian dollar rose 0.34% to $0.6474, recovering somewhat after falling to the lowest level in 3 months at $0.6443 at the end of yesterday’s trading.
As for cryptocurrencies, Bitcoin compensated for some losses after falling briefly from approximately $50,000 to $48,325 at the end of yesterday’s trading, recording $49,580.
A US Department of Labor report yesterday showed that the consumer price index rose 0.3% on a monthly basis last January, which is more than the 0.2% rise expected by economists polled by Reuters.
On an annual basis, the index rose 3.1%, compared to an expected increase of 2.9%.
36 days before the US Federal Reserve meeting to report on interest rates, the markets still expect by 91% that the US Central Bank will keep rates at their current level in the range of 5.25% and 5.5%, according to the “FedWatch” index.
