# U.S. dollar drifts higher; yen heads toward level that prompted intervention
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-11
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: U.S. Dollar Strengthens Amid Rising Inflation Expectations
Meta Description: U.S. dollar edges higher in choppy trading as investors brace for strong inflation report this week, amid rising interest rates and geopolitical uncertainties.
URL: https://financedigest.com/u-s-dollar-drifts-higher-yen-heads-toward-level-that-prompted-interventionhtml

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By Gertrude Chavez-Dreyfuss and Samuel Indyk

NEW YORK/LONDON (Reuters) -The U.S. dollar [edged higher](https://www.financedigest.com/londons-ftse-100-edges-higher-set-for-fourth-weekly-gain.html "London’s FTSE 100 edges higher, set for fourth weekly gain") in choppy trading on Tuesday, adding to recent gains ahead of a key inflation report later this week that is expected to show persistently strong price pressures.

Overall, dollar [sentiment remained positive as worries about rising interest rates and geopolitical tensions unsettled investors](https://www.financedigest.com/6-months-to-go-until-brexit-and-investor-sentiment-remains-bold.html "6 months to go until Brexit and investor sentiment remains bold"), while the yen hovered near the level that prompted last month’s intervention.

Strong U.S. labour market data and a high inflation forecast expectation on Thursday have all but dashed hopes on anything but high interest rates through 2023, which should drive the [dollar back toward the 2002 peak hit](https://www.financedigest.com/pound-hits-10-month-peak-euro-up-as-dollar-under-pressure.html "Pound hits 10-month peak, euro up as dollar under pressure") last month.

“The U.S. payrolls [report last Friday was pretty strong](https://www.financedigest.com/strong-nighttime-earthquake-jolts-sleeping-mexicans-at-least-one-death-reported.html "Strong nighttime earthquake jolts sleeping Mexicans, at least one death reported") and a big blow to anybody looking for a Fed pivot anytime soon. The [Fed needs to keep the pedal to the metal here and make it clear that the economy is still too strong including the labor market](https://www.financedigest.com/markets-start-signalling-fed-may-be-going-too-far-amundi.html "Markets start signalling Fed may be going too far – Amundi") and inflation,” said Mazen Issa, senior FX strategist, at TD Securities in New York.

We have [yet to see any momentum on the inflation](https://www.financedigest.com/swiss-national-bank-says-inflation-battle-not-yet-won.html "Swiss National Bank says inflation battle not yet won") front. Ultimately for FX, it’s still a [dollar game and there is really no relief in sight until we make significant inroads in the labor market and inflation,”](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides") he added.

[Risk appetite](https://www.financedigest.com/u-s-dollar-advances-vs-major-currencies-as-risk-appetite-fades.html "U.S. dollar advances vs major currencies as risk appetite fades") was also hurt as Russia continued to strike Ukrainian cities on Tuesday in retaliation for a blast that damaged the only bridge linking Russia to the annexed Crimean peninsula.

In mid-morning trading, the U.S. dollar index was up 0.1% at 113.19, [inching toward](https://www.financedigest.com/ftse-100-inches-towards-recent-highs-as-bp-shines.html "FTSE 100 inches towards recent highs as BP shines") the 20-year high of 114.78 it touched late last month.

The [dollar touched a three-week high against the yen](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles") of yen 145.86, just shy of the 24-year peak of 145.90 hit before the Japanese government stepped in to prop it up three weeks ago. It was last [flat at 145.73 per dollar](https://www.financedigest.com/russian-rouble-opens-flat-sticks-to-60-mark-against-u-s-dollar.html "Russian rouble opens flat, sticks to 60-mark against U.S. dollar").

Japan chief cabinet secretary Hirokazu Matsuno on Tuesday reiterated the government’s willingness to intervene, [saying they will take “appropriate](https://www.financedigest.com/yen-trims-gains-as-possible-next-boj-governor-says-current-policy-appropriate.html "Yen trims gains as possible next BOJ governor says current policy appropriate") steps on excess FX moves.

Fear of intervention has helped the yen firm in recent weeks, but as it drifted back to multi-decade lows, analysts were keeping an eye on whether the [Bank of Japan will step](https://www.financedigest.com/uk-banks-and-insurers-told-to-step-up-help-for-struggling-customers.html "UK banks and insurers told to step up help for struggling customers") in again.

The euro was little changed at $0.9702, after four days of losses that have seen the currency drift [toward the 20-year low](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low") of $0.9528 it touched on Sept. 26.

Britain’s [markets remained on edge and not exactly soothed by the Bank](https://www.financedigest.com/hsbc-appoints-new-markets-head-amid-wider-investment-bank-reshuffle.html "HSBC appoints new markets head amid wider investment bank reshuffle") of England (BoE) stepping up bond buying and UK Finance Minister Kwasi Kwarteng promising to bring forward some budget announcements.

On Tuesday, the BoE acted again to stem a collapse in the government [bond market by announcing a move to purchase inflation-linked debt until the end of the week](https://www.financedigest.com/shares-and-bonds-nervy-as-rate-hike-week-looms.html "Shares and bonds nervy as rate-hike week looms").

Adding to the BoE’s headaches was labor market [data that showed Britain’s unemployment rate fall](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") to its lowest since 1974 in the three months to August, but the drop was driven by a record jump in the number of people leaving the labour market.

Sterling wobbled, sliding for a fifth straight day to its [lowest level since](https://www.financedigest.com/uk-mortgage-approvals-hit-lowest-since-june-2020.html "UK mortgage approvals hit lowest since June 2020") Sept. 29 at $1.0999. The pound was last flat at $1.1055.

Meanwhile, the risk-sensitive Australian [dollar hit](https://www.financedigest.com/european-shares-hit-nine-month-high-dollar-wobbles-after-powell-remarks.html "European shares hit nine month high, dollar wobbles after Powell remarks") a 2-1/2 year low of $0.6248 on Tuesday. Analysts at the National Australia [Bank said the Aussie was the market’s “whipping boy” in a selloff and that further lows were possible in the near term as sentiment](https://www.financedigest.com/sterling-rises-as-receding-bank-sector-worries-lift-sentiment.html "Sterling rises as receding bank sector worries lift sentiment") is fragile.

China’s offshore yuan [eased against the buoyant dollar](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease"), as a resurgence of COVID-19 cases dimmed the economic outlook. The dollar was last up 0.3% at 7.177.

========================================================

Currency bid prices at 10:22AM (1422 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 113.1800 113.0600 +0.12% 18.311% +113.5000 +112.8400

Euro/Dollar $0.9703 $0.9703 +0.02% -14.63% +$0.9737 +$0.9670

Dollar/Yen 145.7250 145.7350 +0.00% +26.59% +145.8550 +145.5000

Euro/Yen 141.40 141.39 +0.01% +8.50% +141.7500 +141.0200

Dollar/Swiss 0.9969 0.9994 -0.23% +9.31% +1.0021 +0.9948

Sterling/Dollar $1.1067 $1.1060 +0.07% -18.16% +$1.1113 +$1.0999

Dollar/Canadian 1.3820 1.3780 +0.30% +9.32% +1.3855 +1.3761

Aussie/Dollar $0.6279 $0.6299 -0.37% -13.67% +$0.6314 +$0.6248

Euro/Swiss 0.9673 0.9699 -0.27% -6.71% +0.9714 +0.9672

Euro/Sterling 0.8765 0.8774 -0.10% +4.35% +0.8806 +0.8753

NZ $0.5591 $0.5566 +0.40% -18.36% +$0.5626 +$0.5536

Dollar/Dollar

Dollar/Norway 10.7540 10.6795 +1.05% +22.50% +10.7935 +10.7120

Euro/Norway 10.4323 10.3672 +0.63% +4.24% +10.4745 +10.3459

Dollar/Sweden 11.3551 11.3011 +0.50% +25.92% +11.3734 +11.2808

Euro/Sweden 11.0185 10.9642 +0.50% +7.66% +11.0261 +10.9675

[(Reporting by Samuel Indyk in London](https://www.financedigest.com/london-reclaims-place-as-preeminent-global-financial-centre-for-the-first-time-since-2013-according-to-global-regulatory-outlook-report-from-duff-phelps.html "London reclaims place as preeminent global financial centre for the first time since 2013, according to Global Regulatory Outlook report from Duff & Phelps") and Gertrude Chavez, Tom Westbrook in Sydney and Ankur Banerjee in Singapore; Editing by Kirsten Donovan, Mark Porter and David Evans)


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