On Friday, the dollar briefly hit 150 yen versus the closely monitored yen, aided by a jump in 10-year US Treasury rates toward 5% as Federal Reserve Chairman Jerome Powell hinted there was potential for future interest rate hikes.
The yield on the benchmark 10-year Treasury note, which hit 5% overnight for the first time in 16 years, climbed 30 basis points last week, the most since April 2022.
The Middle East war prompted a rush into safe-haven assets such as gold and the Swiss franc, but Treasuries were dominated by interest rate expectations.
This did not, however, translate into a comparable boost for the dollar this week, which only achieved minor gains while maneuvering the 150 level versus the yen. This figure marks the threshold above which many market players expect the Japanese Ministry of Finance will act to strengthen the yen.
This month, speculators virtually quadrupled their bullish holdings in the dollar against other G10 currencies, reaching the biggest level in a year.
Meanwhile, the USD/JPY pair, which gained as high as 0.14% to 150.00 on Friday, closed at 149.870, tracking US 10-year bond rates.
Market participants fully expect no change in interest rates at the Federal Reserve’s upcoming policy meeting.
However, according to a recent Reuters poll, the prospects of decreasing interest rates in the first half of next year are rapidly receding.
In other news, the pound plummeted as much as 0.37% to two-week lows after a series of statistics showed British consumer confidence falling in October after a month of dismal retail sales.
The British pound sank 0.2 percent to $1.2116, reaching its two-week low.
The euro has steadied at $1.0572, while the Swiss franc, which has benefited from safe-haven flows, is on track for its biggest weekly gain versus the dollar in three months after increasing 1%.
On Friday, the Swiss franc reached its highest level versus the euro since 2015, when the Swiss National Bank abandoned its currency peg. In the most recent transaction, the Swiss franc was valued at 0.94345 per euro.
In Asia, the Chinese yuan finished at 7.3361 to the dollar in the external market after China held its major lending interest rates steady at the monthly fixing on Friday, as expected by the market.