NEW YORK: The dollar was slightly higher on Monday following another suspected currency intervention from Japan, while the pound faltered after Britain’s Conservative Party chose its third leader this year and the Chinese offshore yuan fell to a record low.
The yen hit a low of 149.70 to the dollar overnight before hitting a high of 145.28 within minutes, suggesting that the Bank of Japan (BOJ), acting for the Japanese Ministry of Finance, was intervened again.
The yen was last at 148.825, down 0.71% against the greenback.
Overnight yen volatility hit its highest level since Sept. 21, the day before the BOJ intervened to support the currency for the first time since 1998.
Japan likely spent a record 5.4 trillion to 5.5 trillion yen ($36.16 billion to $36.83 billion) in its yen-buying intervention last Friday, according to estimates. Tokyo money market brokerage firms.
Sterling rocked after former Chancellor Rishi Sunak became the next leader of Britain’s Conservatives, paving the way for him to become the country’s next prime minister.
“However Sunak’s premiership plays out, there are likely to be tougher times ahead for the UK economy as it struggles to emerge from a worsening downturn and even from the prospect of a general election,” said Giles Coghlan, chief market analyst at HYCM.
“Having said that, there is one aspect of helping the GBP that is often overlooked. On the other side of the Atlantic, a slowdown in Federal Reserve policy would likely help lift the GBP as much, if not more, than UK fiscal policy. The British pound was last up 0.01% at $1.13105, after a daily high above $1.14.
The dollar held firm after the alleged BOJ intervention but weakened, briefly turning negative, after data showed U.S. business activity contracted for a fourth consecutive month in October, the latest evidence of a slowing economy in the face of high inflation and rising interest rates.
In September, the Fed made its third consecutive rate hike of 75 basis points, and a fourth such hike is expected at next week’s policy meeting, although aggressive policymakers remains to be debated.
As of 10:40 a.m. EDT (2:40 p.m. GMT), the dollar was up 0.72% at 111.91 against a basket of six peer currencies.
The euro was last up 0.18% at $0.988, while the Chinese offshore yuan fell to a new high against the dollar at 7.3322.
Chinese President Xi Jinping secured a third term as head of a precedent, choosing a top governing body made up of loyalists. Xi is likely to stick to his zero COVID policy and could favor the state over private sector growth, analysts say.