Yen Weakens as Dollar Soars on Fed Outlook

19 Dec 2024 , 11:00 AM

The yen fell to a one-month low ahead of a policy decision by the Bank of Japan (BOJ) later in the day, while the dollar flirted with a two-year high on Thursday as the Federal Reserve indicated a slower pace of rate cuts in 2025.

A broad dollar rally was triggered by Fed Chair Jerome Powell and his team’s hawkish stance, which caused traders to drastically reduce expectations for next year’s easing. As a result, currencies such as the South Korean won, the Canadian dollar, and the Swiss franc fell to historic lows in early Asia trade on Thursday.

The Canadian dollar plummeted to its lowest level in more than four years at 1.44655 per US dollar, while the Swiss Franc fell to a five-month low of 0.90215 per dollar.

The value of the won fell to its lowest point in fifteen years.

The dollar index, on the other hand, remained stable at 108.15, close to Thursday’s two-year peak of 108.27.

With his repeated and unambiguous comments to the need for prudence from here on jolting markets worldwide, Powell stated on Wednesday that further reductions in borrowing prices now depend on additional progress in decreasing stubbornly high inflation.

Now that the Fed’s year-ending policy meeting is over, attention will shift to the BOJ and the Bank of England (BoE) meetings, which end later on Thursday. Both are anticipated to hold their rates constant.

For feedback and suggestions, write to us at [e-mail]