Dollar edges down but still close to 5-1/2 month high, Fed, Middle East in focus
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The dollar edged down but was still within striking distance of its 5-1/2-month high on Wednesday, keeping the yen rooted near 34-year lows after Federal Reserve officials reiterated interest rates are likely to stay higher for longer. Recent data suggested the U.S. economy was on a different track to that which the Fed had forecast, which led investors to cut their bets on future rate cuts. Risks of a broadening Middle East conflict added to the dollar's short-term appeal as a safe-haven asset. The U.S. and its allies planned fresh sanctions against Iran over its unprecedented attack on Israel, seeking to dissuade Israel from a major escalation as its war cabinet was set to meet again on Wednesday to decide a response. The dollar was slightly lower versus the euro at $1.0628 on Wednesday, not far from the five-and-half-month high of $1.06013 it touched on Tuesday. Against a basket of currencies, the dollar was last at 106.22, just shy of the five-month peak of 106.51 touched on Tuesday. The yen last hovered just below 154.79 per dollar, its weakest level in 34 years. Market participants raised the bar of a possible intervention by the Bank of Japan (BOJ) to prop up the Japanese currency, now mentioning the 155 level from previous 152, even if they believed the BOJ could step in at any time. Hedge funds have built up their biggest bet against the yen in 17 years, raising the prospect that when Japan's embattled currency does rebound, the short-covering rally could be a powerful one. The dollar's strength has cast a shadow across the currency market, with emerging markets in Asia scrambling to stem the decline in their currencies, with the prospect of rate cuts this year in the region swiftly evaporating.
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https://finance.yahoo.com/news/dollar-steady-yen-fragile-fed-014158036.html