Published by Rae Wee
SINGAPORE (Reuters) – The dollar hit a two-year peak on Thursday after the Federal Reserve signaled a slower pace of rate cuts in 2025, while the yen slipped after the Bank of Japan (BOJ) to stand standards and offer some hints. on his money view.
The BOJ kept interest rates steady earlier in the day, as expected, sending the yen down as much as 0.3%.
The Japanese currency then extended losses to weaken past the 156 level per dollar for the first time in a month when BOJ Governor Kazuo Ueda spoke at a press conference after the meeting that started at 0630 GMT.
It was last trading nearly 1% weaker at 156.30 per dollar.
While investors had been on the lookout for signs of impending BOJ tightening, especially after the Federal Reserve struck a more dovish tone at the end of its policy just a day earlier, there was no ' Ueda's comments left investors wiser.
The governor confirmed that policymakers needed more time to evaluate incoming economic data and the impact of US President Donald Trump's policies when he returns to the White House in January.
“The Fed's pause and BOJ's hesitance indicate that dollar/yen may be under additional pressure,” said Christopher Wong, currency strategist at OCBC.
In the broader market, the fallout from a hawkish tilt by the Fed on Wednesday continued to ripple across markets, with moves in currencies particularly evident as traders largely dialed back expectations of easing next week. – year.
The US dollar rally sent its peers, including the Swiss franc, the Canadian dollar and the South Korean won falling to low levels in early Asian trade on Thursday.
“We believe that (the) decision marks the beginning of an extended pause from the FOMC, even if it is a little too early to say this clearly,” said Nick Rees, senior FX market analyst at Monex Europe.
“We now expect US rates to hold steady, at least through the first half of 2025. If correct, an upward shift in market expectations should support the dollar over the coming months.”
At the bottom of a five-month pool of 0.90215 per dollar, and the Canadian dollar sank to the lowest level in more than four years at 1.44655 per US dollar.
The gain fell to its weakest level in 15 years, while the Australian and New Zealand dollars also fell to more than two-year lows.
In contrast, the rate stood at 108.05, close to Thursday's two-year peak of 108.27.
Fed Chairman Jerome Powell said that further reductions in borrowing costs now depend on further progress in reducing high inflation, with his clear references – and again – to the need for caution from the this is about sending global stocks crashing and producing a spin.
The Bank of England (BoE) will also announce its policy decision later on Thursday, where it is expected to hold interest rates.
Ahead of the result, sterling was crushed near a three-week low of $1.26005. The euro meanwhile rose 0.42% to $1.03945, nursing a steep 1.34% fall in the previous session.
Down Under, a low of $0.6199, before retreating slightly to last trade 0.26% higher at $0.6234.
The New Zealand dollar hit its weakest level since October 2022 at $0.5608 and last bought $0.5639.
It was further emphasized by data on Thursday that showed New Zealand's economy sank into recession in the third quarter, underscoring the case for more aggressive rate cuts.
