NEW YORK: The yen rose for a second straight session against the dollar on Tuesday, boosted by comments from a senior Japanese politician about normalising monetary policy, adding pressure on the Bank of Japan to continue hiking interest rates to boost the currency.
The US dollar overall was higher as traders waited for inflation data later in the week, while the Australian and New Zealand dollars continued to struggle after China’s surprise interest rate cuts. The Aussie dollar is viewed as a proxy for China risks.
The US dollar was last down 0.6% against the Japanese yen at 156.08. It earlier fell to a five-week low of 155.375 on Thursday.
Senior ruling party official Toshimitsu Motegi said overnight that the Bank of Japan should more clearly indicate its resolve to normalise monetary policy, including through steady interest rate hikes. The BOJ next sets rates on July 31.
Most economists polled by Reuters expect the BOJ to keep rates on hold at the meeting. It last raised rates in March to a range of 0%-0.1% from -0.1%.
Thierry Albert Wizman, global FX and rate strategist at Macquarie in New York said the yen may have gotten a boost from the politician’s comments and expectations about a potential policy move higher next year.
The yen has found some support on the back of Tokyo’s recent bouts of intervention to prop up the currency and as traders looked to the BOJ’s decision.
In late morning trading, the dollar index, which tracks the US currency against six peers, rose 0.2% to 104.51, after falling to a four-month low of 103.64 last week.
The dollar reacted little to data showing US existing home sales fell more than expected in June as the median house price set another record high.
Home sales dropped 5.4% last month to a seasonally adjusted annual rate of 3.89 million units, the lowest level since December, data showed.
Meanwhile, the median existing home price soared 4.1% from a year earlier to an all-time high of $426,900, the second straight month it scaled a record peak.
In other currencies, the euro was down 0.4% against the dollar at $1.0849. Sterling was 0.1% lower at $1.2912.
The Australian and New Zealand dollars struggled to regain their footing on Tuesday after China’s move to cut several key interest rates.
China surprised markets on Monday by cutting major short and long-term interest rates in its first such broad move since last August, signalling intent to boost growth in the world’s second-largest economy.
The two Antipodean currencies extended losses after slumping in the previous session in the wake of the news.
The Australian dollar fell to a three-week low of US$0.6612, while the New Zealand dollar hit its weakest level since early May at US$0.5952.
In cryptocurrencies, the first US exchange-traded funds (ETFs) tied to the price of ether, the world’s second-largest cryptocurrency after bitcoin, began trading on Tuesday.
Ether was last down 0.4% at $3,477, while bitcoin also fell, down 1.7% at $67,050.
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