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Yen-dollar exchange rate hits five-year high as US yields rise on hawkish Fed

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News Tech: The dollar hovered near a five-year high against the yen on Thursday, supported by a rise in US Treasury yields as bets rose on a Federal Reserve rate hike on Thursday. The greenback stood at 116,115 yen, little changed from Wednesday, when it rose to Tuesday’s high of 116,355, supported by more hawkish rhetoric from a Fed official and an employment report. make America strong. Anticipation of more rapid policy tightening rattles riskier assets, with sterling falling from a near two-month high and cryptocurrencies falling to multi-month lows.

Earlier today, the ADP National Employment report showed Private payrolls in the United States last month more than doubled what economists polled by Reuters polled, likely raising expectations for the number of nonfarm payrolls expected in Friday.
“Given the possibility of a rate hike in March and the threat from QT this year, the USD should remain resilient,” TD Securities strategists wrote in a note. “This should keep USDJPY supportive over time, although we think a very hawkish Fed could spell short-term upset for risk markets.”

Fed officials said the “very tight” US labor market could warrant an earlier rate hike and signaled that they may also reduce the central bank’s overall holdings to rein High inflation – a process known as quantitative tightening (QT) – minutes of December 14 to 15 policy meetings showed. Accordingly, lending rate futures are pricing in about an 80% chance of the Fed raising a quarter of a percentage point at its March meeting.

The US dollar index, which measures the currency against the yen and five other currencies, was mostly flat at 96.209 from Wednesday, as it recovered from intraday losses to 0.44% after the announcement. publish minutes. Yields on 5-year Treasury bills, which are sensitive to interest rate expectations, hit a near two-year high. Despite the Fed’s growing hawkishness in recent months, signaling a three-quarter rate hike for this year at its December meeting, the dollar index’s gains have stalled since hitting a 16-year high month is 96,938 at the end of November.

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