Updated February 29th, 2024 at 09:45 IST

Dollar prepares for inflation data; Yen strengthens on BOJ remarks

Bitcoin continued its upward trajectory, surpassing $63,000 as investment flows into new US bitcoin exchange-traded funds remained robust.

Reported by: Business Desk
Dollar | Image:Pexels
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Dollar braces for inflation data: The US dollar maintained its strength on Thursday ahead of US inflation data that could influence interest rate expectations, while the yen saw gains following comments from a Bank of Japan official suggesting a potential shift away from ultra-easy monetary policies.

Bitcoin continued its upward trajectory, surpassing $63,000 as investment flows into new US bitcoin exchange-traded funds remained robust. With a more than 45 per cent surge this month, Bitcoin is approaching a record high above $69,000.

The yen faced pressure as short-term rates in Japan remained near zero while US and European interest rates stayed relatively high, prompting investors to seek better returns elsewhere. 

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The yen declined 2 per cent against the dollar in February and 2.7 per cent against the euro, marking its largest monthly slide against the euro since last June.

BOJ board member Hajime Takata's remarks suggesting a potential overhaul of ultra-loose monetary policies, including an exit from negative interest rates and bond yield control, bolstered the yen. Market analysts noted that his comments could increase expectations for an earlier-than-expected policy adjustment at the BOJ's March meeting.

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Japan's top currency diplomat Masato Kanda reiterated the government's vigilance regarding currency movements and readiness to intervene, speaking on the sidelines of the G20 finance leaders meeting in Sao Paulo.

Meanwhile, the New Zealand dollar faced selling pressure after the central bank signaled a pause in rate hikes, leading to a downward revision in rate hike expectations.

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Investors awaited the release of the core personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge. Expectations for a rise of 0.4 per cent indicated a potential increase from previous forecasts, with market sentiment leaning towards reduced pricing for a May rate cut and supporting the US dollar.

The Australian dollar declined by 1.1 per cent in February amid falling iron ore prices and expectations of stable interest rates. 

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The euro remained steady against the dollar, reflecting decreased expectations for rate cuts in Europe, while sterling traded at $1.2669.

The US dollar index held steady at 103.86.

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(With Reuters Inputs)

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Published February 29th, 2024 at 09:45 IST