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HomeCurrenciesSteady Dollar Keeps Yen Near Crucial 152 Mark
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Steady Dollar Keeps Yen Near Crucial 152 Mark

The dollar remained firm near a four-month pinnacle on Wednesday, maintaining pressure on the yen close to multi-decade lows, even as the looming prospect of currency intervention by Tokyo curbed further declines in the Japanese currency.

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Meanwhile, the yuan showed little change following a private-sector survey indicating accelerated growth in China’s services sector in March, suggesting a nascent recovery in the world’s second-largest economy.

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The Japanese yen was last trading at 151.565 per dollar, hovering near its recent descent to 34-year lows of 151.975, witnessed following the Bank of Japan’s notable policy shift. While the BOJ’s decision to raise rates for the first time in 17 years initially jolted the yen, policymakers’ commitment to proceed cautiously with further increases has weighed heavily on the currency, particularly given the considerable Japan-U.S. yield gap.

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Japanese officials have persistently engaged in verbal interventions in recent days to support the yen, with the threat of intervention looming large at the 152 yen level, which some market participants view as a critical threshold.

“Any direct response to yen depreciation is more likely to come from the Ministry of Finance,” remarked Koichi Sugisaki, a strategist at Morgan Stanley MUFG Securities.

“Unilateral intervention to support the JPY is unlikely to have a lasting impact on USD/JPY given its limited relevance to future monetary policy direction. Nonetheless, intervention could trigger more pronounced declines than usual.”

In other currency movements, the euro gained 0.06% to $1.07760, rebounding from a recent one-month low, while sterling held at $1.2580.

The dollar, which reached a near five-month high of 105.10 against a basket of currencies on Tuesday, steadied at 104.72.

The dollar’s recent surge has been propelled by robust U.S. economic data, including manufacturing growth in March, a significant rebound in new orders for U.S.-manufactured goods, and resilience in the labor market.

“Market expectations for FOMC rate cuts have diminished in recent weeks due to strong U.S. economic data and resistance from FOMC officials,” noted Carol Kong, a currency strategist at Commonwealth Bank of Australia.

“I anticipate the dollar will maintain its strength in the near term, posing a challenge for other major currencies.”

Traders now anticipate approximately 70 basis points of rate cuts by the Federal Reserve this year, less than the central bank’s projections, with the commencement of an easing cycle fully priced in for July.

Chinese yuan, rattled by a resurgent dollar, traded at 7.2348 per dollar in the onshore market, near a 4-1/2-month low. Its offshore counterpart inched higher to 7.2530 per dollar.

The Aussie and Kiwi dollars, often correlated with the yuan, faced pressure amid a strengthening dollar and a weakening yuan. The Aussie edged up 0.04% to $0.6520, while the Kiwi rose marginally to $0.5972.

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