Home Business Dollar up as risky assets fall; yen rebounds from 1998 lows

Dollar up as risky assets fall; yen rebounds from 1998 lows

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  • Dollar index up 0.4%; all eyes on Wednesday’s Fed decision
  • Bitcoin down 20%

NEW YORK, June 13 (Reuters) – The safe-haven dollar hit a fresh four-week high against a basket of currencies on Monday, buoyed by fears of a global economic slowdown and bets on big interest rate hikes. interest by the US Federal Reserve. .

Global financial markets continued to benefit from warmer-than-expected US inflation data on Friday, which led to a broad-based decline in risk sentiment and fueled bets on even more aggressive policy tightening. Read more

On Monday, government bonds sold off and stock markets around the world were hit hard. Read more

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“The USD extended its gains from Friday as risk continues to dissipate across the board,” Brad Bechtel, global head of FX at Jefferies, said in a note.

The U.S. dollar currency index, which tracks the greenback against six other major currencies, rose 0.4% to 104.83 ahead of a 2-decade high of 105.01 hit in mid -may.

Traders have a lot to do this week, including policy meetings from the Fed, Bank of England and Swiss National Bank.

The US Federal Reserve is expected to raise its key rate by 50 basis points on Wednesday, with some, including Barclays and Jefferies, expecting the Fed to raise rates by 75 basis points.

“A 75 basis point (bps) move is definitely going to come as a surprise to some who are holding a hard line on 50 basis points,” Bechtel said, adding that he expects the index to dollar rises on such a move.

The battered Japanese yen, floundering near lows against the greenback not seen since 1998, was one of the major currencies rising against the dollar on Monday.

The yen found some support in Japanese government spokesman comments on Monday that Tokyo is concerned about the currency’s sharp drop and stands ready to “react appropriately” if necessary. Read more

The Bank of Japan (BoJ) has so far resisted pressure to tighten policy, weakening the country’s currency.

On Monday, the dollar was down 0.6% at 133.58 yen.

The Australian dollar, considered a liquid indicator of risk appetite, fell 1.3% and the New Zealand dollar 1.4%.

The pound fell to a one-month low against the dollar on Monday, coming under selling pressure after data showed Britain’s economy unexpectedly contracted in April. Tensions with the European Union over post-Brexit trade with Northern Ireland also weighed on the pound, which fell 1.1% to $1.2175.

Bitcoin fell 19.1% on Monday after major US cryptocurrency lending firm Celsius Network froze withdrawals and transfers citing “extreme” conditions, the latest sign of how financial market turmoil is cause distress in the cryptosphere. Read more

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Reporting by Saqib Iqbal Ahmed; Editing by William Maclean

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