Greenback vs yen jumps as Fed officers counsel extra consideration is coming to charges

NEW YORK, Aug 2 (Reuters) – The dollar strengthened sharply against the Japanese yen on Tuesday as US Federal Reserve officials said more interest rate hikes are coming soon.

A trio of Fed officials from across the policy spectrum suggested on Tuesday that they and their colleagues remain determined and united in getting US rates up to a level that would put a dent in activity and inflation. Read more

“​​​​​​​We got a steady dose of Fed talk that … prompted a strong move back into the greenback,” said Edward Moya, senior market analyst at Oanda in New York.

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“What you see is that the dollar’s reign is not going away anytime soon, as the interest rate differential looks set to get even wider against the yen.”

Investors are always eager to see the monthly US jobs report on Friday.

The US dollar index, which measures the greenback against six peers, rose 0.9% to 106.31. The index has softened recently as investors reassess how aggressive the Fed can be with future rate hikes.

Against the yen, the dollar was up 1.2% at 133.12 yen.

The dollar rose to a session higher against the yen as yields rose in the US Treasury market. Two-year US yields, which reflect rate expectations, rose to one-week highs.

Early in the session, the dollar was weaker against the yen as concerns over US House Speaker Nancy Pelosi’s visit to Taiwan made investors more risk-averse.

Pelosi said her trip showed America’s solidarity with the self-governing island claimed by China, but China criticized the highest-level US visit in 25 years as a threat to peace and stability. Read more

The offshore Chinese yuan fell 0.09% against the greenback at $6.7780 per dollar.

The Australian dollar fell 1.5% after the Reserve Bank of Australia’s move to raise interest rates by 50 bps to 1.85%, in line with expectations. Read more

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Currency bid prices at 4:30PM (2030 GMT)

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Reporting by Caroline Valetkevitch; Additional reporting by Saikat Chatterjee in London; Editing by David Holmes, Susan Fenton and Lisa Shumaker

Our Standards: Thomson Reuters Trust Principles.

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