[New York FX] Dollar Holds Firm—'Cooperation with BOJ' Says Japanese PM as Dollar-Yen Hits 155 Intraday

(New York=Yonhap Infomax) Jin Woo Choi – The US dollar edged higher in New York trading.

The dollar, which had been climbing on yen weakness, retreated to near flat levels as a sharp drop in global oil prices eased inflation concerns and coincided with a decline in US Treasury yields.

The yen came under renewed pressure after Japanese Prime Minister Sanae Takaichi pledged to work closely with the Bank of Japan (BOJ) to support a strong economy.

According to Yonhap Infomax (screen number 6411), as of 16:00 Eastern Time on the 12th, the dollar-yen exchange rate stood at 154.748 yen, up 0.622 yen (0.404%) from the previous New York close of 154.126 yen.

Earlier in the day, Prime Minister Takaichi told the Council on Economic and Fiscal Policy, "Appropriate monetary policy management is crucial to achieving both a strong economy and stable inflation," adding, "We will continue to cooperate for economic development."

BOJ Governor Kazuo Ueda was also present at the meeting, with the Prime Minister directly appealing for cooperation in front of the central bank chief.

Following Takaichi's remarks, the dollar-yen briefly surged to 155.044 yen during New York morning trading. This marks the first time the 155-yen level has been breached in nine months, since February.

Eric Theoret, FX strategist at Scotiabank, said, "We expect a rate hike at the December BOJ meeting, but concerns are growing that the decision could be delayed to January next year."

The dollar index (DXY), which measures the greenback against six major currencies, rose 0.034 points (0.034%) to 99.487 from the previous session.

The dollar climbed as high as 99.709 intraday, supported by weakness in the yen and the pound.

The turning point for the dollar came with the release of OPEC's monthly report.

OPEC projected a daily supply surplus of 20,000 barrels next year, a sharp reversal from last month's forecast of a 50,000-barrel daily shortfall.

On supply glut concerns, December West Texas Intermediate (WTI) crude futures plunged 4.2% at the New York Mercantile Exchange.

The dollar index also slipped as low as 99.418 intraday, tracking the decline in US Treasury yields.

The US House of Representatives is scheduled to vote at 19:00 (09:00 KST) on a Republican stopgap spending bill passed by the Senate. If approved and signed by President Donald Trump, the temporary US federal government shutdown will end.

Bart Melek, head of commodity strategy at TD Securities, said, "The US government is reopening, and the market is anticipating economic data releases," adding, "These indicators are likely to show signs of US economic weakness."

The pound-dollar exchange rate fell 0.00311 dollars (0.236%) to 1.31303 dollars from the previous session.

In the UK, calls for Prime Minister Keir Starmer's resignation are mounting. There are moves within the ruling Labour Party to replace the party leader after the budget announcement on the 26th. In the UK's parliamentary system, this effectively means a push to change the prime minister.

Amid political instability, the pound-dollar rate dropped as low as 1.30830 dollars intraday before rebounding in the afternoon as the dollar weakened.

Kathleen Brooks, director of research at XTB, noted, "UK bond yields rose slightly against the backdrop of political turmoil," adding, "Political instability is once again threatening the UK."

The offshore dollar-yuan (CNH) rate fell 0.0098 yuan (0.138%) to 7.1122 yuan from the previous session.

jwchoi@yna.co.kr

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