(Updates prices, adds analyst comment)
By Hannah Lang
WASHINGTON, Dec 28 (Reuters) - The dollar touched a
one-week high against the yen on Wednesday, boosted by a jump in
Treasury yields and investor expectations for a rebound in
Chinese growth as COVID-19 curbs loosen.
The dollar rallied by as much as 0.67% against the yen to
134.40 in Asian trading, the most since Dec. 20, when
the Bank of Japan sent the pair spiraling lower with an
unexpected loosening of the 10-year Japanese government bond
yield policy band.
That day, the yen staged its biggest one-day rally against
the dollar in 24 years, closing 3.8% higher, as traders
speculated about an eventual unwinding of stimulus.
But a summary of opinions from the meeting, released on
Wednesday, showed policymakers backing a continuation of
ultra-accommodative policy, even as they discussed improving
prospects for higher wage growth and sustained inflation next
year.
The dollar was last up 0.55% against the Japanese yen at
134.240.
If yields on Japanese government bonds remain steady, there
will likely be no further pressure on the BOJ "to take another
step," said Greg Anderson, global head of foreign exchange
strategy at BMO Capital Markets in New York.
"They can just continue to reiterate what they said at the
press conference: this is just a minor technical adjustment.
We've done it before; nothing to see here, folks," he said.
Throwing a wrench in the works for markets in the final week
of the year is China's rapid dismantling of the strict
zero-COVID policies that have severely hampered its economy for
nearly three years.
Investors are having to reconcile the pick-up in economic
activity as China's consumers and businesses return to some kind
of normality while also dealing with the impact of a surge in
infections.
"With infection levels running at many thousands per day,
it's little wonder that China's COVID response should top many
analysts' list of concerns about 2023," said DailyFX analyst
David Cottle.
Elsewhere, the Australian dollar rose 0.22% against
its U.S. namesake to $0.674, while the New Zealand dollar
strengthened by 0.65% to $0.632.
The commodity currencies "are reacting a little bit to
the recent uptick in oil, but that's about it," said Brad
Bechtel, global head of FX at Jefferies.
"In the square-up process that we're going through,
probably those currencies have room to drift stronger, still,"
said Anderson.
The dollar index, which measures the U.S. currency
against six major rivals, rose 0.202% to 104.420. It hit a
six-month low of 103.44 two weeks ago, when the Federal Reserve
slowed the pace of its interest rate increases.
Sterling rose by as much as 0.63% on Wednesday
against the dollar to 1.211, as Britain's markets reopened after
a long weekend, before leveling out. The pound last fell 0.02%
against the dollar at 1.203.
The euro was down by 0.18% at $1.06225, having
traded steadily around six-month highs in the couple of weeks
since European Central Bank President Christine Lagarde said
that rate hikes would need to continue.
========================================================
Currency bid prices at 2:10PM (1910 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 104.4100 104.2100 +0.21% 9.144% +104.4700 +103.8300
Euro/Dollar $1.0621 $1.0642 -0.19% -6.58% +$1.0675 +$1.0611
Dollar/Yen 134.2900 133.5100 +0.55% +16.61% +134.4000 +133.4200
Euro/Yen 142.63 142.00 +0.44% +9.45% +142.9400 +141.9000
Dollar/Swiss 0.9281 0.9294 -0.14% +1.75% +0.9307 +0.9247
Sterling/Dollar $1.2027 $1.2031 -0.02% -11.06% +$1.2124 +$1.2003
Dollar/Canadian 1.3598 1.3524 +0.54% +7.54% +1.3599 +1.3487
Aussie/Dollar $0.6745 $0.6734 +0.16% -7.22% +$0.6801 +$0.6720
Euro/Swiss 0.9856 0.9883 -0.27% -4.95% +0.9903 +0.9844
Euro/Sterling 0.8829 0.8842 -0.15% +5.11% +0.8862 +0.8794
NZ $0.6316 $0.6274 +0.73% -7.67% +$0.6355 +$0.6260
Dollar/Dollar
Dollar/Norway 9.8905 9.8270 +0.60% +12.21% +9.8955 +9.7900
Euro/Norway 10.5071 10.4414 +0.63% +4.94% +10.5135 +10.4312
Dollar/Sweden 10.4598 10.4683 -0.21% +15.99% +10.4875 +10.3669
Euro/Sweden 11.1086 11.1320 -0.21% +8.55% +11.1560 +11.0640
(Reporting by Hannah Lang in Washington; Additional reporting
by Amanda Cooper in London and Kevin Buckland; Editing by David
Goodman, Tomasz Janowski and Chizu Nomiyama)
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