The Dollar Remains Powerful Despite Fragile Fluctuating Yen

The dollar rose on Monday despite another intervention in the Japanese currency market. Sterling has been unsettled for the last seven weeks as Rishi Sunak was elected Britain’s third Prime Minister. Meanwhile, the Chinese yuan also hit fresh lows offshore.

The yen fell to 149.70 against the dollar overnight before rising to a high of 145.28, signaling another intervention by the Bank of Japan (BOJ), which represents Japan’s finance ministry. The day before, the BOJ intervened to support the currency for the first time since 1998. Yen overnight volatility spiked to its highest level since September 21. According to a Tokyo financial market broker, Japan may have spent 5.4T to 5.5T yen ($36.16B to $36.83B) on currency-buying interventions last Friday.

Should We Expect a Hawkish Change in Rates?

The U.S. economy has been progressively displaying tremendous resilience, but it now appears that this is changing. The Fed raised interest rates by 75 basis points for the third time in September. Fed should do a fourth rate increase of similar magnitude at the policy-setting meeting next week. Though it is unclear how aggressive policymakers will be going forward. Markets are now waiting to see how far the economy has deteriorated and whether the Fed will hold off on raising interest rates after raising rates in December and February. At 3:30 p.m., the greenback was up 0.089 percent at 111.93 against a basket of six. EDT (1930 GMT).

After Sunak, the nation’s former chancellor, was named head of the British Conservative Party, paving the way for him to become the country’s next prime minister, the pound’s value fluctuated. Regardless of how Sunak’s leadership plays out, the U.K. economy will certainly face more challenging times as it struggles to recover from a deepening downturn and perhaps the possibility of a general election, according to Giles Coghlan, the chief market analyst at HYCM.