Dollar Rallies as Yen Weakens Ahead of Fed Decision
The US dollar continued its upward trend on Friday, holding near a one-week high ahead of crucial data releases and central bank decisions. The Japanese yen, however, weakened for a second consecutive day, causing Asian currencies to be mostly subdued.
The yen's pair with the dollar was around 154.34, leaving the dollar 1.2% higher against the yen this week. Despite this, the pair is down over 3% in the past month after the yen's sharp rally earlier in September.
The rise in US yields has put pressure on global bond markets, with the benchmark 10-year Treasury yield around 4.97%, close to the 5% level according to Reuters. Markets are now awaiting US consumer-price data later Friday, one of the final major releases before the Federal Reserve's September 15-16 meeting.
The Fed is widely expected to lift its policy rate by 25 basis points to 1.25% at its September 17-18 meeting. DBS expects a similar hike but sees the BOJ signaling a flexible pace of tightening rather than committing to rapid successive increases.