The dollar stood near a one-year high at 151.38 yen on Friday and hit one-week highs against the Australian and New Zealand dollars
The dollar was headed for its best week against the yen in three months on Friday, after Fed Chair Jerome Powell and a number of Fed officials defied market expectations of a peak in U.S. rates.
In crypto currencies, bitcoin and ether held near multi-month highs, with renewed speculation over the imminent approval of a bitcoin ETF breathing new life into the digital assets.
A number of Fed policymakers including Powell on Thursday said they are still not sure that interest rates are high enough to finish the fight with inflation, comments taken as hawkish by markets and which sent the greenback rising.
The dollar sat near a one-year high at 151.38 yen on Friday and hit one-week highs against the Australian and New Zealand dollars.
Powell’s speech was quite hawkish, and that just really hit sentiment, said Tina Teng, market analyst at CMC Markets.
The remarks from Fed came a week after the U.S. central bank left interest rates steady and strengthened expectations that rates could have peaked, causing the dollar and Treasury yields to drop in the aftermath.
The greenback, nevertheless, regained its footing this week and was eyeing a weekly gain of nearly 1.3 per cent against the yen, its best performance since August.
Dollar/yen did trend higher this week and it is now back above 151. It does raise the risk of the Bank Of Japan stepping into the (forex) market to bolster the yen, but I think markets are expecting no intervention unless dollar/yen moves to around 152, said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
The Aussie and the kiwi were likewise headed for a 2.4 per cent and 1.8 per cent weekly drop against the greenback respectively, also their sharpest decline in months.
Even though we do not expect Powell to deliver on the tightening bias, that tightening bias does support the dollar, added Kong.
The Australian dollar last sat at $0.6359 after sliding to a one-week low of $0.6352 earlier during the session, while the New Zealand dollar was last at $0.5893, having similarly reached a one-week low of $0.5886 earlier.
Declining oil prices and a faltering economic recovery in China have also kept a lid on the Antipodean currencies.
Australia’s central bank, in its quarterly Statement on Monetary Policy released on Friday, cautioned there were risks of further upside surprises to inflation after its latest hike in interest rates, while also raising forecasts for economic growth and employment.
In Europe, the euro steadied at $1.0668, while sterling slid 0.02 per cent to $1.2218. They were both on track to lose 0.56 per cent and 1.3 per cent for the week, respectively.