Dollar sinks against yen, near 2½-year low against sterling after upbeat Fed change By Reuters

By Kevin Buckland

TOKYO (Reuters) – The yen rose to a three-week high against the dollar on Monday as Federal Reserve Chairman Jerome Powell contrasted sharply with Bank of Japan Governor Kazuo Ueda’s dovish tone.

The US currency neared a 13-month low against the euro. It also fell closer to levels last seen in March 2022 against sterling, with comments by Bank of England chief Andrew Bailey that it was “too early to declare victory” on inflation signaling a less aggressive stance on tapering interest rate than the Fed.

The dollar fell 0.59 percent to 143.56 yen for the first time since Aug. 5 in the early hours of the month, before last trading down 0.25 percent.

Sterling was steady at $1.3215 after jumping to $1.32295 on Friday for the first time in 17 months.

Although Fed officials had appeared increasingly dovish ahead of the Fed’s annual symposium in Jackson Hole, Powell “used stronger language” than his peers on Friday when he delivered his keynote address, said Tapas Strickland, chief economist market at National Australia Bank (OTC). :).

“Importantly, there was a notable absence of caveats such as ‘graduality’, which ‘is probably what got the markets excited,'” Strickland said.

In Asia, the BOJ’s Ueda, speaking in parliamentary testimony earlier on Friday, “stuck to the scenario of the BOJ having to adjust the degree of easing – the central bank’s talk of further raising the policy rate from a low — and he downplayed the significance of the July rate hike on market turbulence,” Strickland said.

Many market participants anticipated that Ueda might strike a less shocking note in the special session of parliament, which was called amid criticism that the surprise rise last month helped trigger a swift relaunch in yen bets and aggressive selling of Japanese actions.

The value – which measures the currency against a basket of six major bets including the euro, sterling and yen – remained at 100.64, just off a 13-month low of 100.60 hit late last week.

The euro was little changed at $1.1190, not far from Friday’s high of $1.1201, a level last seen last July. That’s despite sources telling Reuters that European Central Bank policymakers are lining up behind another rate cut on September 12.

Traders unanimously expect the Fed to start its easing campaign on Sept. 18, but see a 36.5% chance of a 50-basis-point cut, according to CME Group’s (NASDAQ: ) FedWatch tool. That’s up from the 25% chance a week earlier.

Elsewhere, the Australian dollar fell 0.1 percent to $0.6790, but remained close to Friday’s peak of $0.67985, the highest level since July 11.

The value rose slightly to 7.1130 per dollar in offshore trade, the strongest since Aug. 5.

Bitcoin, the leading cryptocurrency, added 0.9% to $64,271.60.