In this illustration image dated June 16, 2022, Japanese yen and U.S. dollar banknotes are shown with an exchange rate chart. REUTERS/Florence Lo/Illustration/File Photo Acquire License Rights
SINGAPORE, Sept 12 (Reuters) – The yen steadied near a one-week high on Tuesday as comments from Japan’s top central banker about a possible end to its negative interest rate policy reverberated in markets, while the dollar regained some lost ground.
Bank of Japan (BOJ) Governor Kazuo Ueda said in a newspaper interview over the weekend that the bank could get enough data by the end of the year to determine whether it can end negative interest rates, noting that the yen fell on Monday largest daily gain against the dollar in two months.
The Japanese currency was last marginally lower at 146.61 per dollar, after hitting a weekly high of 145.91 in the previous session.
“Governor Ueda has essentially set a conditional path and timeframe for raising interest rates and moving away from his negative interest rate policy, data permitting,” said Chris Weston, head of research at Pepperstone.
“One can assume that the BOJ is also one step closer to abandoning yield curve control (YCC), and logically one could argue that the BOJ wants to raise interest rates and abolish YCC at the same time.”
The yen has come under enormous pressure against the dollar due to widening interest rate differentials with the United States since the Federal Reserve began its aggressive rate hike cycle last year, while the BOJ remains a dovish outlier.
Elsewhere, the U.S. dollar recovered some of its nearly 0.5% loss against a basket of currencies on Monday.
The Australian dollar was last 0.12% lower at $0.6423, while the New Zealand dollar fell 0.14% to $0.5911 after being among the biggest gainers against a weaker greenback on Monday, falling 0.8% or 0.6%.
However, the euro hit a weekly high of $1.0771.
“Given that we also had quite strong momentum behind long US dollar positions in the G10 currency pairs, I think this is a reason for the market to take profits ahead of the US (inflation) numbers said IG market analyst Tony Sycamore.
U.S. inflation data for August is due on Wednesday, with traders eager to see whether the world’s largest economy is actually on track for a “soft landing” and whether the Fed needs to go further in raising interest rates.
The U.S. dollar index, which ended last week on an eight-week winning streak, rose 0.03% to 104.60 after falling 0.46% in the previous session. The pound stabilized at $1.2508.
The offshore yuan found some support near Monday’s weekly high and was last trading at 7.3020 per dollar.
It had risen more than 0.8% in the previous session, its strongest daily rise in about six months, boosted further by data showing new bank lending in China exceeded expectations, nearly quadrupling in August from July.
Among cryptocurrencies, Bitcoin was last slightly higher at $25,179 after falling below $25,000 for the first time in three months on Monday.
Ether also rose 0.29% to $1,556.20, after falling to a six-month low of $1,531.10 in the previous session.
“Right now, we’re really seeing the impact of tighter market liquidity once again weighing on speculative assets like Bitcoin,” said Kyle Rodda, senior financial markets analyst at Capital.com.
Reporting by Rae Wee, editing by Sam Holmes
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