SINGAPORE: The dollar perched near a six-month peak on Wednesday as jitters over China and global growth dragged on risk sentiment, while the yen was close to a 10-month low, drawing the strongest warning since mid-August from Japan’s top currency diplomat.
The yen was at 147.66 per dollar in early Asian hours, just shy of 147.8 per dollar, the lowest since Nov. 4 it touched overnight.
The Asian currency has hovered around the key 145 per dollar level for the past few weeks, leading traders to keep a wary eye on signs of an intervention.
“We won’t rule out any options if speculative moves persist,” Japan’s top currency diplomat Masato Kanda told reporters on Wednesday.
Kanda, Japan’s vice-minister of finance for international affairs, has been the central figure in the country’s efforts to stem the sharp decline of the yen since last year.
Japan intervened in currency markets last year in September when the dollar rose past 145 yen, prompting the Ministry of Finance to buy the yen and push the pair back to around 140 yen.
“It’s no surprise that officials stepped up jawboning as yen weakness has stood out,” said Christopher Wong, a currency strategist at OCBC in Singapore.
“We are probably going to see more of such verbal intervention if yen moves are deemed to be one-sided and excessive.”
Against a basket of currencies, the dollar rose 0.067% to 104.80, not far off the six-month high of 104.90 it touched overnight.
Economic data from China and Europe on Tuesday fanned some fears of slowing global growth, pushing investors to scramble for the dollar.
US Fed official signals support for September rate pause
Data from the euro zone and Britain showed a decline in business activity last month, while a private-sector survey showed China’s services activity expanded at the slowest pace in eight months in August.
The euro was unchanged at $1.0721 in Asian hours, having breached a three-month low of $1.0705 overnight. Sterling was last at $1.2559, down 0.03% on the day.
It also touched a three-month low of $1.25285. Federal Reserve Governor Christopher Waller said on Tuesday the latest round of economic data gives the US central bank space to see if it needs to raise interest rates again and that he saw nothing that would force a move toward boosting the cost of short-term borrowing again.
Markets are pricing in a 93% chance of the Fed holding rates steady later this month and a 55% chance of no more hikes this year, according to CME FedWatch tool.
The Australian dollar eased 0.17% to $0.637, after diving 1.3% on Tuesday following the policy decision from Reserve Bank of Australia to keep rates steady.
The kiwi fell 0.31% to $0.587.
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