The dollar nudged at the closely watched 150 level against the yen on Friday, encouraged by a rise in U.S. 10-year Treasury yields towards 5% after Federal Reserve Chair Jerome Powell suggested there was scope for more rate rises.
The yield on the benchmark 10-year Treasury, which nudged at 5% for the first time in 16 years overnight, has risen by 30 basis points this week - marking its biggest weekly rise since April 2022.
War in the Middle East has sparked a push into safe-haven assets like gold and the Swiss franc, but trading in Treasuries has been dominated by the rate outlook.
Yet this has not translated in a similar boost to the dollar this week, which has toyed with the 150 level against the yen, the point at which many market participants believe Japan's Ministry of Finance (MOF) could step in to shore up the currency.
Speculators have almost doubled their bullish dollar positions against other G10 currencies this month to the most in a year.
Meanwhile, the dollar/yen pair, which on Friday was up 0.1% at 149.905, tends to track 10-year U.S. yields. This week's bond sell-off has raised the chances of a break of 150 in the currency.
At a closely-watched speech on Thursday, Fed Chair Powell said the strength of the U.S. economy and continued tight labour markets could require still tougher borrowing conditions to control inflation, though he added rising market interest rates could reduce the need for the central bank to act.
Money markets show traders fully expect to see no change in rates at the Fed's next policy meeting.
But the chances of a rate cut in the first half of next year are fading fast, according to a recent Reuters poll.
Elsewhere, the pound fell as much as 0.37% to two-week lows after a series of data releases showed a collapse in British consumer confidence in October followed weak retail sales the month before.
Sterling was down 0.28% at $1.21045, skimming two-week lows.
The euro was flat at $1.0572, while the Swiss franc, which has caught a bid from safe-haven flows, headed for its largest weekly gain versus the dollar in three months, having risen 1%. The Swissie was last down against the dollar, which rose 0.2% to 0.8935 per dollar.
Source : Reuters
