The possibility of raising the Fed 50 basis points pushes the yen and euro down

London — The dollar rose as Federal Reserve Chairman Jerome Powell offered a potential rate hike of 50 basis points on Tuesday. Meanwhile, the yen fell below the psychological level of 120 as the Bank of Japan repeatedly supported ultra-loose monetary policy.

The euro was also under pressure and fell against the dollar to a nearly week-long low.

The yen hit a six-year low of 120.50, falling 0.8% on the day and more than 4% against the dollar this month as US yield surges and a deteriorating trade balance sucked cash from the world’s third-largest economy. It has fallen.

The yen cross also suffered and the euro hit a high of 132.41 in five weeks. The Japanese currency has fallen against the Swiss franc to its lowest level in almost seven years.

Haruhiko Kuroda, the governor of the Bank of Japan, said Japan must maintain ultra-loose monetary policy so that inflation does not hurt the economy.

Powell pushed US yields to their highest level in years by exposing the possibility of a 50 basis point (bp) rate hike.

“Rising energy prices and rising US Treasury yields are both bad news for the Japanese yen,” said a UOB analyst in Singapore, a quarterly outlook note raising the year-end dollar / yen forecast from 119 to 121. It is stated in.

Treasury yields of 2, 5, 10 and 30 have all been the highest since Tuesday 2019, widening the yield gap in Japan and broadly supporting the dollar elsewhere.

The euro, which was hit by the Ukrainian War and rising oil prices, fell below $ 1.10 in London’s early trading, but fell 0.1% by 0900 Greenwich Mean Time to trade at $ 1.1005.

European Union ministers are divided on whether to join the United States to sanction Russia’s oil, and some countries, including Germany, argue that Brock is too dependent on Russia’s fossil fuels. doing.

European Central Bank President Christine Lagarde and Chief Economist Philip Lane will give a speech later in the day.

Danske Bank analysts expect the euro to plummet to $ 1.05 in 12 months due to different monetary policies between the Fed and the ECB.

The US dollar index rose 0.15% to 98.651.

Cryptocurrencies were bid on Tuesday, and Bitcoin jumped to a three-week high. Last time it was up 3.3% to $ 42,528.

By Joice Alves and Tom Westbrook