Yen crumbles under towering dollar and US Treasury yields
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The yen struggled to break away from a 34-year low on Friday and was headed for a weekly decline, while the dollar hovered near a five-month high alongside U.S. Treasury yields as traders heavily scaled back bets for a slew of U.S. rate cuts this year. The euro was eyeing its sharpest weekly fall in about four months, pressured in part by a resurgent greenback and expectations that the European Central Bank (ECB) could begin easing rates in June, likely ahead of the Federal Reserve. The yen was last marginally higher at 153.17 per dollar, languishing near a 34-year trough of 153.32 per dollar hit in the previous session on the back of a surge in U.S. Treasury yields, which the dollar/yen pair tends to closely track. Japanese Finance Minister Shunichi Suzuki said on Friday authorities were analysing not just recent yen levels but factors that are driving the currency's moves, adding to the slew of verbal intervention from authorities in recent weeks in a bid to stem the yen's decline. Elsewhere, sterling dipped 0.01% to $1.2553 while the euro last bought $1.0726, pushing some distance away from a two-month low hit in the previous session. The single currency was on track for a weekly loss of more than 1%, after the ECB on Thursday held interest rates at a record high, as expected, but signalled it could start lowering them as soon as June. Futures now point to just about 40 basis points worth of easing from the Fed this year, down from roughly 60 bps at the start of the week. The benchmark 10-year yield was last at 4.5784%, flirting with a five-month peak of 4.5930% hit in the previous session. The two-year yield, which typically reflects near-term rate expectations, eased slightly to 4.9482%, after pushing above 5% for the first time since November on Thursday. The renewed dollar strength also weighed on the Australian and New Zealand dollars, which each fell 0.02%. The yen crumbled under the towering dollar and U.S. Treasury yields, while the euro faced its sharpest weekly fall in four months. Japanese authorities are analyzing factors driving the yen's decline, and verbal intervention has been used to stem the currency's slide. The European Central Bank (ECB) is expected to begin easing rates in June, ahead of the Federal Reserve. The benchmark 10-year U.S. Treasury yield flirted with a five-month peak, and futures now indicate a reduced expectation of rate cuts from the Fed this year. The Australian and New Zealand dollars also weakened against the dollar.
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