The U.S. dollar sits near a 19-month peak and is on track for its strongest week since September, after strong U.S. jobs and inflation data and hawkish Fed comments. The yen last traded at 159.84 per dollar, just short of the 160 level that makes markets wary of intervention from Tokyo.
The yen last traded at 159.84 per dollar on Friday, its lowest level since September and down nearly 1% for the week. The 160 threshold is a level that makes markets nervous about official intervention from Tokyo.
Hot U.S. data lifts the dollar
The dollar is on track for a 0.8% weekly gain, according to Investing.com. A strong U.S. jobs report and hotter-than-expected October consumer inflation drove the move.
Treasury yields also repriced after President Donald Trump said Washington does not need a diplomatic deal with Iran. The two-year yield rose 34 basis points over two sessions, its sharpest two-day climb in three-and-a-half years.
Markets price a December Fed hike
Fed officials voiced concerns about entrenched inflation during the week. Markets now fully price a 25-basis-point rate hike by the Federal Reserve next month, and they assign a 15% probability to a 50-basis-point move in December. That tail risk sat at virtually zero a week ago.
The U.S. Producer Price Index is due later in the session, followed by remarks from Fed officials Susan Collins and Lorie Logan. Their comments will likely decide whether the 50-basis-point bets grow or fade before the weekend.
Tokyo warns against one-sided moves
Japan's top currency diplomat, Atsushi Mimura, warned against "one-sided moves" and reminded traders of the joint intervention by Tokyo and Washington earlier this year.
Still, the yen's weakness rests on a growing conviction that the gap between Japanese and U.S. interest rates will persist in coming months. That view overshadows the Bank of Japan's gradual tightening plans.
Source: Investing.com
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