Dollar domination continues, as yen slumps to 2-decade low. Here’s why U.S. investors should pay attention. The dollar soared against major rivals on Thursday, hitting a two-decade high against the yen, as the Bank of Japan vowed to continue a dovish stance and pledged unlimited bond buying.
Extending losses into the U.S. morning, the yen USDJPY, 2.09% slid 1.7% to ¥130.63 against the dollar, a level not seen in more than two decades. The ICE Dollar Index DXY, 0.63%, which measures the U.S. dollar against major rivals, climbed 0.7% to 103.69, the highest since January 2017, according to FactSet. The index has gained 8% this year.
Also under pressure, the pound GBPUSD, -0.68% fell 0.8% to $1.2445, a level not seen since mid 2020, while the euro EURUSD, -0.54% slumped 0.5% to $1.0498, a level not seen since late 2016.
Sparking the dollar’s run higher earlier in the session, the Bank of Japan vowed to defend a 0.25% yield on its 10-year fixed-rate Japanese government bond TMBMKJP-10Y, 0.219% by buying those bonds every business day, as long as needed. ...........
.................While a strong dollar can be a bonus for vacationing Americans, there are plenty of reasons why investors might not want to welcome that momentum.
“Practically, a strong USD implies that exports of U.S. products will become more expensive for their clients abroad, thus profitability of U.S. exporting companies drops,” Peter Iosif, senior research analyst at Noteris, said in emailed comments.
“Also,
a strong dollar may imply that the Fed is draining the market from cash (tightening monetary policy), thus reducing the supply of USDs and thus boosting its value while at the same time there are fewer dollars to invest and move around,” he added. ..................
https://www.marketwatch.com/story/dollar-domination-continues-as-yen-slumps-to-two-decade-low-11651131504?mod=home-page
