Yen back under pressure as BOJ intervenes, bitcoin surges

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HONG KONG — The Japanese yen resumed its fall on Monday morning, after the Bank of Japan intervened in the market to defend its implied yield cap, and bitcoin nearly hit a year high ahead of a week filled with plenty of data. to guide the markets.

The yen fell to 122.78 to the dollar, its lowest since December 2015, giving up its mini rally on Friday when the Bank of Japan failed to step in to defend its target.

However, on Monday morning, the BOJ offered to buy unlimited amounts of 10-year Japanese government bonds (JGBs) at 0.25%, after the 10-year JGB yield hit a high of 0.245% over six years.

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“While short-term correction risk has increased given its rapid ascent, we expect the dollar-yen to remain well supported at elevated levels,” Barclays analysts said, citing the divergence in monetary policies and the negative impact of rising commodity prices. on Japan’s terms of trade.

The US Federal Reserve’s staunchly hawkish stance has markets pricing in an aggressive pace of rate hikes this year, while the Bank of Japan remains dovish, especially given policymakers’ fears that higher prices caused by rising energy costs could hurt the world’s third-largest group. economy.

A senior Japanese government official said on Sunday that monetary policy should remain loose.

As rising commodity prices have sent the yen down in recent weeks, it has provided a powerful boost to commodity-linked currencies.

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The Australian dollar was at $0.75115, holding near last week’s four-month high, while the Canadian dollar was at 1.2496 to the dollar, just off Friday’s two-month high.

Australian currency watchers also take a closer look at Australia’s budget on Tuesday. Australia’s treasurer said on Sunday the budget would mark a very significant material improvement in the government’s bottom line.

A possible headwind for the Australian is the COVID-19 situation in China, after Shagnhai said on Sunday he would force the city to carry out COVID-19 tests.

The dollar climbed 0.17% against the offshore yuan on Monday morning to 6.394.

Major eurozone savers are expected to release inflation numbers from Wednesday, and “a stronger-than-expected eurozone CPI will add to market prices for ECB tightening rates, supporting the euro,” Barclays analysts said.

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The single currency was last at $1.0973, having fallen slightly in recent days, still under pressure due to the economic impact of war in Ukraine.

The pound weakened 0.1% to $1.3168 and the dollar index was stable at 98.909.

Also on Friday this week, US nonfarm payrolls data, although analysts do not expect this to have a major effect on US interest rate expectations and the dollar. , given that the market is already positioned for several rate hikes this year.

In the cryptocurrency markets, bitcoin was hovering around $46,800 after hitting $47,766 in early trading, its highest level since early January. Ether the second largest cryptocurrency in the world was at $3,289.

(Reporting by Alun John editing by Shri Navaratnam)

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