Dollar set for best week versus yen in three months after Powell speech

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By Rae Wee and Harry Robertson

SINGAPORE/LONDON (Reuters) -The dollar was on track for its best week against the yen in three months on Friday, after Federal Reserve Chair Jerome Powell and a chorus of other officials stressed that the central bank may have to hike rates again.

A slew of Fed policymakers including Powell said on Thursday they are still not sure that interest rates are high enough to finish the battle with inflation. Investors saw the comments as hawkish, pushing bond yields and the dollar higher.

The dollar stood near a one-year high at 151.43 yen on Friday. It was on track for a weekly gain of 1.39% against the yen, its biggest increase since August.

“Powell’s speech was quite hawkish, and that just really hit sentiment,” said Tina Teng, market analyst at CMC Markets (LON:).

The yen’s weakness is keeping traders on red alert for signs of intervention from the Japanese government to prop up the currency. Authorities intervened twice last year in response to a slump in the yen.

“It does raise the risk of the BOJ stepping into the (forex) market to strengthen the yen, but I think markets are expecting no intervention unless dollar/yen moves to about 152,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:).

The , which tracks the currency against six major peers, was little changed at 105.91 on Friday. It was on track to gain 0.81% this week, after rising 0.39% on Thursday.

The greenback dropped last week when the Federal Reserve held interest rates steady at 5.25% to 5.5% and some weaker-than-expected U.S. economic data weighed on Treasury yields.

Meanwhile, the euro was roughly flat at $1.0669, after falling 0.4% on Thursday.

Sterling was down 0.1% at $1.2209, after data showed the UK economy stagnated in the third quarter.

, the world’s largest cryptocurrency, meanwhile held near an 18-month high and last bought $36,499, having peaked at $37,978 in the previous session, its highest level since May 2022.

Prices of the digital assets have surged on swirling speculation of an imminent approval of BlackRock (NYSE:)’s spot bitcoin ETF, with the asset management giant also having registered to create an ethereum trust.

A spot crypto ETF would make the sector “more accessible for institutional investors to enter the crypto space, likely boosting demand and subsequently prices,” said Carl Szantyr, managing partner of digital asset hedge fund Blockstone Capital.

Elsewhere, the Norwegian crown jumped after data showed that inflation in the country came in much stronger than expected in October. The dollar was last down 0.69% against the at 11.153 crowns to the dollar.

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