The dollar hovered near a 4-1/2-month high against major peers on Tuesday as traders scrambled to push back on bets on the Federal Reserve’s first interest rate cut of the year.
The dollar held near six-week highs hit on Monday against the euro and pound after U.S. data unexpectedly showed manufacturing expansion for the first time since September 2022.
Concerns about intervention by the Japanese authorities led to a decline in the dollar, even as long-term U.S. government bond yields, to which currency pairs tend to move, rose more than 14 basis points overnight to a two-week high of 4.337%. The rise against the yen was limited.
Gold, which performs best when yields are falling, has bounced back from record highs.
U.S. interest rate futures markets are currently pricing in a 61.3% chance that the Fed will cut rates in June, down from about 70.1% a week ago, according to CME’s FedWatch tool.
Richard Franulovich, Head of Currency Strategy at Westpac, said of the dollar: “The disconnect between solid U.S. growth dynamics and the reduced risk of Fed rate cuts in response to slower growth in other currency majors means that a decline in the DXY could be a buying opportunity.” “This suggests that it should be considered a foreign currency,” he said, referring to the dollar. index.
dollar index 
DXYThe currency, which is benchmarked against the yen, euro, pound and three other compatriots, rose 0.02% to 105.02, after gaining 0.51% to 105.07 on Monday.
EUR 
euro dollar The stock fell 0.08% to $1.0733, hovering around last night’s low of $1.0731.sterling 
pound dollar The stock fell 0.04% to $1.25455 after falling to $1.2540 on the previous session.
JPY 
US dollar yen It rose slightly on Tuesday to 151.565 to the dollar. US dollar yenafter falling to 151.77 the previous day.
Last week, the level hit a 34-year low of $151.975, prompting Japan to step up its warnings against intervention. Finance Minister Shunichi Suzuki reiterated on Tuesday that he would not rule out all options to deal with disorderly exchange rate fluctuations.
Japanese authorities intervened when the yen fell toward a 32-year low of 152 yen to the dollar in 2022.
The yen’s decline comes even as the Bank of Japan raised interest rates last month for the first time since 2007, with officials wary of further tightening as the economy’s bid to overcome decades of deflation remains fragile.
Westpac’s Franulovic said: “Despite the heightened risk of intervention, the Bank of Japan’s policy stance remains very accommodative and Japan’s statistics continue to point to the fragility of a ‘virtuous cycle’ economic recovery. ” he said.
“If intervention occurs, the resulting USD/JPY flash below 150.00 could be relatively deep, given the recent surge in leveraged shorts in the Japanese Yen.However, if positioning is more balanced, If it does, it will likely still be seen as a buying opportunity.”
In other regions, the Australian dollar 
australian dollar usd It fell to a nearly one-month low of US$0.64815 on Monday, but remained flat at US$0.6489.
new zealand kiwi dollar 
new zealand dollar usd At one point, the stock fell 0.07% to $0.5949, and is slowly heading back towards its lowest level in four and a half months, which was $0.59395 from the night before.
spot gold 
Money The stock rose 0.11% to $2,253.09 after falling from the previous session’s all-time high of $2,265.49.
Representative virtual currency Bitcoin 
BTCUSD It fell 0.87% to $69,158, well within last week’s relatively narrow trading range.
