Tuesday, 23 April 2024

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Dollar steadies, yen pinned near 152 By Reuters

Dollar steadies, yen pinned near 152 By Reuters

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By Rae Wee

SINGAPORE (Reuters) -The dollar was on the front foot on Wednesday, pinning the yen near its lowest its decades though the heightened threat of currency intervention by Tokyo capped further declines in the Japanese currency.

The yuan was steady after a private-sector survey showed that China’s services activity growth accelerated in March, in a sign sentiment was staging a tentative recovery in the world’s second-largest economy.

The yen was last at 151.585 per dollar, languishing near last month’s slump to 34-year lows of 151.975 in the wake of the Bank of Japan’s historic policy shift.

While the BOJ raised rates for the first time in 17 years, policymakers’ commitment to go slow on further increases have hammered the yen especially given the still-wide Japan-U.S. yield gap.

Japanese officials have carried on with their jawboning efforts for days now in a bid to defend the currency, with the overhanging threat of an intervention serving as stiff resistance for the greenback at the 152 yen level, which some market participants see as a line in the sand.

“Any direct response to (yen) depreciation is more likely to come from the Ministry of Finance,” said Morgan Stanley MUFG Securities strategist Koichi Sugisaki in a note.

“We would not expect any unilateral JPY-supportive intervention to trigger more than a temporary decline in given that such action would say nothing about the future direction of monetary policy. That said, we do see potential for intervention to trigger sharper-than-usual falls.”

Elsewhere, the euro rose 0.02% to $1.0772, standing some distance away from an over one-month low hit in the previous session, after the U.S. dollar ran into some profit-taking late overnight.

Sterling slipped 0.08% to $1.25675.

The dollar, which on Tuesday touched a nearly five-month high of 105.10 against a basket of currencies, was last steady at 104.76.

The greenback’s charge higher this week has come on the back of yet another run of resilient U.S. economic data, which showed manufacturing growing for the first time in 1-1/2 years in March, a greater-than-expected rebound in new orders for U.S.-manufactured goods, as well as a still-resilient labour market.

“Markets have generally scaled back their expectations for FOMC rate cuts in recent weeks, given the strength of the U.S. economic data and pushback from FOMC officials,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:) (CBA).

“I think the dollar will…

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