The dollar surged to a 24-year peak against the yen

The dollar reached a 24-year high against the yen and a 37-year high against the pound, as Japan’s dovish monetary policy and Europe’s economic problems contrasted with a relatively stronger U.S. economy and a hawkish Federal Reserve keen to bring inflation down to its 2% objective.

The U.S. dollar rose to 144.89 yen, reaching that level for the first time since August 1998. It is presently only a few points away from its 1998 high of 147.43. The dollar was last up 0.9% against the yen, trading at 144.09 yen.

The dollar fell to $1.1407 against sterling, its lowest level since 1985, and was recently down 0.1% at $1.1509. After falling as low as $0.9864 on Tuesday, the euro plummeted below 99 cents on Wednesday. The single currency of Europe was last up 0.8% at US$0.9984.

In contrast, a survey released overnight revealed that the U.S. services industry surprisingly increased last month, supporting the assumption that the economy is not in recession.

Also, on Wednesday, the Bank of Canada boosted interest rates by 75 basis points to a 14-year high, as expected, and stated that the policy rate would need to be lifted further to combat galloping inflation.

Despite the rate boost by the Bank of Canada, the U.S. dollar was little changed against the Canadian currency, trading at C$1.3138.

The yen has fallen by 10.1% against the dollar since the beginning of August. Japan’s Chief Cabinet Secretary, Hirokazu Matsuno, warned at a news conference that if “rapid, one-sided” movements in currency markets continue, the administration will take appropriate action, ratcheting up the language.

Many analysts, however, believe that intervention will be difficult because global central banks are more concerned with inflation than with currency rates. In other news, China’s yuan fell to a two-year low, edging in on the $7-per-dollar level, despite government efforts to reverse the trend.

The post The dollar surged to a 24-year peak against the yen appeared first on FinanceBrokerage.