Yen hits weakest level since 1990, pound down after PM announces resignation

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NEW YORK — The dollar surpassed the

symbolic level of 150 yen for the first time since 1990 on

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Thursday, while the British pound turned negative in choppy

trading after Liz Truss said she would resign as the United

Kingdom’s prime minister.

The Japanese currency dipped sharply from an interim high of

150.09 reached in overnight trading, tumbling to 149.63 within a

minute, which raised speculation that the Ministry of Finance

and Bank of Japan might be making stealth interventions at key

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levels.

The yen rebounded to hit new 32-year highs in

afternoon trading in New York, however, getting as high as

150.25. It last traded at 150.18.

While the likelihood of any intervention is an open

question, some analysts think that such a move would not stop

the currency from weakening further absent a shift in the Bank

of Japan’s ultra-dovish policy.

“Until you see either the BOJ change their tune, or if we

start to see the U.S. economic outlook deteriorate a lot quicker

that will help the Fed finally deliver that Fed pivot, you’re

going to see that the bet against the yen is still the favorite

trade in FX,” said Edward Moya, senior market analyst at OANDA

in New York.

The Federal Reserve is expected to continue raising interest

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rates as inflation remains stubbornly high, with some

forecasting its benchmark overnight interest rate to peak above

5%. The rate is currently in the 3.00%-3.25% range.

Philadelphia Fed President Patrick Harker said on Thursday

the central bank is not done with raising its short-term rate

target amid very high levels of inflation, while adding it was

likely the U.S. central bank will find space next year to pause

the tightening process and take stock of how its rate increases

are impacting the economy.

The housing market has been one of the most affected sectors

from higher rates even as other sectors including jobs remain

solid. Data on Thursday showed that sales of existing U.S. homes

slid for an eighth straight month in September.

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Expectations of higher rates have sent U.S. yields and the

dollar higher, particularly against the yen as the BOJ is

committed to keeping interest rates near zero.

Japanese policymakers made fresh threats of intervention on

Thursday. They are seen as more likely to step in if currency

moves become more erratic.

“The (Ministry of Finance) has been very clear that they are

ready to intervene if there is any disorderly price action, so

the markets are priced for that coming at some point in time,”

said Derek Halpenny, European global markets research head at

MUFG.

“Obviously, if we break clearly above 150 we may see some

disorderly price action and that could be the catalyst for some

action,” he added, though emphasizing it would take a sharp move

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in the pair to trigger intervention.

The BOJ will hold its next policy meeting on Oct. 27-28.

The British pound turned lower on the day after Truss said

she would resign as prime minister. She was brought down by the

announcement of an economic program that sent shockwaves through

the markets and divided her Conservative Party just six weeks

after she was appointed.

The pound rallied ahead of the resignation announcement, and

later hit session highs, before changing course and turning

lower. It was last down 0.05% on the day at $1.1219.

“Initially, this is likely to take an uncertainty premium

out of the market, but it depends who takes over, you need a

steady hand at the top,” said Viraj Patel, global macro

strategist at Vanda Research in London.

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The dollar index dipped 0.10% against a basket of major

currencies to 112.86, which analysts said was likely due

to consolidation. The euro gained 0.13% to $0.9785.

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Currency bid prices at 3:03PM (1903 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 112.8600 112.9800 -0.10% 17.977% +113.0900 +112.1600

Euro/Dollar $0.9785 $0.9772 +0.13% +0.00% +$0.9846 +$0.9755

Dollar/Yen 150.1800 149.9100 +0.19% +0.00% +150.2400 +149.5500

Euro/Yen 146.95 146.49 +0.31% +0.00% +147.2900 +146.2500

Dollar/Swiss 1.0041 1.0046 -0.04% +0.00% +1.0068 +0.9996

Sterling/Dollar $1.1219 $1.1223 -0.05% +0.00% +$1.1336 +$1.1172

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Dollar/Canadian 1.3769 1.3762 +0.06% +0.00% +1.3806 +1.3651

Aussie/Dollar $0.6279 $0.6271 +0.15% +0.00% +$0.6356 +$0.6229

Euro/Swiss 0.9826 0.9816 +0.10% +0.00% +0.9851 +0.9812

Euro/Sterling 0.8719 0.8710 +0.10% +0.00% +0.8757 +0.8675

NZ $0.5674 $0.5677 -0.03% +0.00% +$0.5741 +$0.5624

Dollar/Dollar

Dollar/Norway 10.6530 10.6315 +0.17% +0.00% +10.6700 +10.5500

Euro/Norway 10.4248 10.3666 +0.56% +0.00% +10.4451 +10.3585

Dollar/Sweden 11.2622 11.2076 +0.61% +0.00% +11.2835 +11.1600

Euro/Sweden 11.0216 10.9549 +0.61% +0.00% +11.0331 +10.9515

(Additional reporting by Alun John and Samuel Indyk in London,

Editing by William Maclean and Paul Simao)