The BOJ on Monday morning offered to buy unlimited amounts of 10-year Japanese government bonds (JGBs) at 0.25%, after the 10-year JGB yield rose to a six-year high of 0.245%. The dollar rose as much as 123.1 yen in morning trading, the strongest since December 2015 and was last at 122.9, up 0.7% on the day. It has climbed almost 6% in the yen in the last 12 sessions. Sign up now for FREE unlimited access to Reuters.com Register “The market sees the currency gap between the US and Japan as the key dollar-yen lever, so in contrast to the Fed’s recent bullshit, the (BOJ action) gives the impression that the BOJ remains well-groomed, and that leads to a higher dollar-yen, “said Shinichiro Kadota, a senior currency analyst at Barclays in Tokyo. “I think the risk is still bullish in the short term, especially if this monetary policy divergence history remains intact. But the pace was fast enough and it looks a bit overheated, so if we look at opposite headlines, we could see some correction,” he added. The yield on 10-year bonds was last at 2.5046%, having jumped 33 basis points last week. High commodity prices are also hurting the yen as they help widen Japan’s trade deficit, although at the same time they have given a strong boost to commodity currencies. The Australian dollar was at $ 0.752, keeping close to last week’s four-month high, while the Canadian dollar was at $ 1,249 per dollar in just the two-month high on Friday. Australian currency observers are also watching Australia’s budget on Tuesday. The Australian Treasurer said Sunday that the budget would signal a significant material improvement in government results. A possible headwind for Australia is the situation of COVID-19 in China, after Shanghai said on Sunday that it will lock the city to conduct a COVID-19 test. The dollar climbed up 0.24% in the offshore yuan on Monday morning at 6.3986, before gaining the exchange rate. The euro was last at $ 1.0956, falling 0.25% having fallen slightly in recent days, still under pressure due to the economic effects of the war in Ukraine. “The risk balance suggests that the EUR / USD may test 1.0800 in the coming weeks,” CBA analysts said. Inflation data from major European economies and the eurozone is expected from Wednesday, and “the European Central Bank is tied to headwinds and very high inflation,” the CBA said. Sterling was 0.19% lower at $ 1.3157 The dollar index rose 0.23% to 99,079 points. Also a potential driver of the dollar this week is wage figures outside of Friday’s US farms, although as the market is already in a position to aggressively raise interest rates this year, its effect could be muted. say analysts. In cryptocurrency markets, bitcoin was at $ 46,900, after jumping to $ 47,766 at the beginning of trading, its highest level since early January. Ether, the second largest cryptocurrency in the world, was at $ 3,320. Sign up now for FREE unlimited access to Reuters.com Register Report by Alun John in Hong Kong and Kevin Buckland in Tokyo Edited by Shri Navaratnam Our role models: The Thomson Reuters Trust Principles.
