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The rate-sensitive Japanese yen continued tumbling on Tuesday, falling past 142 per dollar, while sterling and the euro tried, and in the euro’s case failed, to recover from multi-year lows against the dollar hit the day before.
The dollar climbed 1.07% on the yen to 142.1, a fresh 24-year high. The dollar is up 23% against the Japanese currency so far this year.
« The FX market is re-focusing on rate hikes by major central banks and the Bank of Japan (BOJ) stood out at the Jackson Hole symposium as the only one that remained resolute about keeping monetary policy accommodative, » said HSBC analysts in a note.
« USD-JPY’s correlation with US yields has thus rebounded to near their strongest year-to-date level, » they wrote in the note, titled, « JPY: staring into the abyss. » The bank changed its forecast for the pair to 144 at the end of the third quarter up from 140 previously.
The U.S. benchmark 10-year yield was last at 3.2557%, up from Friday’s close of 3.191%. U.S. markets were closed on Monday for a holiday.
