© Reuters. FILE PHOTO: In this illustration taken March 10, 2023, Japanese yen and U.S. dollar bills are seen. REUTERS/Dado Ruvic/Illustration/File Photo
By Samuel Indyk and Rae Wee
LONDON (Reuters) – The yen fell near the psychological level of 150 per dollar on Tuesday ahead of a key reading on U.S. inflation due later in the day, while the pound rose to a near six-month high. against the euro after a stronger appreciation than -Expected salary data.
The Swiss franc fell to multi-week lows against the euro and dollar after lower-than-expected consumer prices spurred bets on rate cuts.
The dollar rose to an 11-week high of 149.695 yen, approaching the closely watched 150 yen level that analysts said would likely draw further criticism from Japanese officials in a bid to support the currency.
The yen, which has fallen more than 5% against the dollar so far this year, is under persistent pressure as investors reduce their expectations about the scale and pace of the Federal Reserve's easing cycle.
Yen bears are also feeling emboldened by signs that the Bank of Japan will resist aggressively raising rates even if it abandons negative interest rates this year, while markets are betting.
“The rate differential convergence that boosted the yen late last year is unraveling as markets recalibrate expectations in response to a surprisingly resilient U.S. economy and fading prospects for a Bank of Japan hike any time soon.” term,” said Kyle Chapman, foreign exchange analyst at Ballinger and co. .
Sterling hits its highest level in almost six months at 85.105 pence per euro even as British wages grew at the slowest pace in more than a year as the slowdown was less sharp than most analysts had expected. predicted and Britain's unemployment rate fell unexpectedly.
The pound also rose around 0.1% against the dollar to $1.2640.
“The UK jobs data was stronger than expected, allowing the GBP-USD pair to recover further,” said Roberto Mialich, currency strategist at UniCredit.
“A pick-up in UK CPI inflation is also expected for January, which could keep sterling even firmer,” he added. January inflation data is released on Wednesday.
HEADLINE INFLATION IN SWITZERLAND
Meanwhile, a big decline in headline inflation in Switzerland sent the franc to multi-week lows against the dollar and euro, prompting a flurry of bets on rate cuts as early as March.
“The figures released today reinforce our view that the SNB will be the first G10 central bank to cut rates in this monetary policy cycle,” said Capital Economics Europe economist Adrian Prettejohn, who has forecast a cut at the G10 meeting. next month.
The franc fell 0.7% to 0.8815 per dollar, its weakest level since December 11, and 0.6% to 0.9484 per euro, its weakest level since December 18.
Elsewhere, the euro fell 0.1% against the dollar to $1.0762, while the y fell 0.3% and 0.5% respectively.
That left the price slightly higher at 104.26 ahead of key inflation data later on Tuesday.
“If we see inflation remaining sticky, the dollar will strengthen,” said Amanda Sundström, fixed income and currency strategist at SEB.
“But if we get some relief here and we see something that confirms that inflation is easing, that will give us a weaker dollar.”
A recent string of resilient U.S. economic data, particularly a spectacular jobs report released this month, has raised expectations that U.S. rates are likely to stay high for longer.
Markets are now pricing in about 110 basis points of rate cuts by the Federal Reserve this year starting in May, up from about 160 basis points at the end of last year.
In cryptocurrencies, bitcoin hit its highest level since December 2021 at $50,383 and stabilized above $50,000 for the second day in a row.
The world's largest cryptocurrency is up nearly 18% this year, helped by last month's regulatory go-ahead for U.S.-listed exchange-traded funds (ETFs) designed to track its price.