The dollar strengthened this week, with the dollar index renewing its year-to-date high. The market expects dollar-yen to continue testing ¥160, and is closely monitoring U.S. economic data and remarks from Federal Reserve officials.
The dollar has strengthened in this week's market, with the dollar index renewing its year-to-date high. Hawkish remarks by Federal Reserve Governor Waller and an upside surprise in U.S. CPI have provided the backdrop, with the market pricing in an almost 98% probability of a 0.25% rate hike at the December FOMC. Expectations have also emerged that the probability of a 0.5% rate hike has risen to around 9%.
U.S. economic data are scheduled for release as market factors to watch, including initial jobless claims and October existing home sales. Initial claims are expected to total 194,000 and existing home sales 3.85 million. With year-on-year CPI data, the latest inflation indicator, missing, attention is also focused on the PPI due tomorrow.
Dollar-yen is currently trading in the upper ¥159 range, with ¥160 seen as a key resistance level. Despite remarks by Vice Minister of Finance Mimura aimed at restraining yen depreciation, nervous trading is expected as buying-back continues. Expectations of actual intervention and rate checks are also part of the backdrop.