because investors expect the Federal Reserve to raise interest rates by 0.5 percentage points at the next interest rate meeting. The dollar rose to a two-year high on Monday, in line with a trend higher in U.S. Treasury yields. Meanwhile, the benchmark 10-year Treasury note yield hit a 3-year high of 2.884%.
Zhitong Finance APP has noticed that the trend of the U.S. interest rate futures market shows that the probability of a 50 basis point interest rate hike at the Federal Reserve policy meeting next month is 96%. It is expected that the cumulative interest rate hike will be about 215 basis points in 2022, which provides sufficient supply for the U.S. dollar. support.
The U.S. dollar index, which measures the U.S. dollar against six currencies, was last at 100.99, up 0.2%, and rose to 101.02 in early trading. It has gained 2.6% so far this month.
The dollar climbed to a 20-year high against the yen, highlighting the contrast in monetary policy between the hawkish Federal Reserve and the ultra-dovish Bank of Japan. As of press time, the exchange rate of the U.S. dollar against the Japanese yen was 127.78 yen per U.S. dollar.
The dollar has gained 4.5% against the yen so far this month, which would be its second-biggest monthly percentage gain since 2016, behind only the 5.8% gain in March this year. Juan Perez, head of foreign exchange trading at
Monex USA, said, "Historically, when the Federal Reserve plans to raise interest rates and tighten monetary policy, the U.S. dollar will eventually fall during the interest rate hike cycle, but there is currently little possibility of suppressing the U.S. dollar in the market. optimism."
Carol Kong, currency strategist at Commonwealth Bank of Australia, said, "The main driver of the dollar against the yen has been the surge in U.S. bond yields."
Calculations based on data released by the U.S. Commodity Futures Trading Commission (CFTC) on Friday , speculators' net long bets on the U.S. dollar fell for a second straight week. The value of net long U.S. dollar positions was $13.22 billion in the week ended April 12.
Scotiabank said the lower dollar positioning reflected “a weakening of bullish sentiment on the dollar,” while a further rise in short bets on the Swiss franc and Japanese yen “reflected the dollar’s yield advantage relative to those two currencies.” Each currency's respective central banks are still far from tightening policy."
On the other hand, the yen earlier retreated from its lows after Bank of Japan Governor Haruhiko Kuroda and Finance Minister Shunichi Suzuki both expressed concerns about currency weakness. . But then it fell back to its lows again and hit a new low in nearly 20 years.
Judging from the recent statements of Bank of Japan Governor Haruhiko Kuroda, the central bank's current attitude towards the depreciation of the yen is gradually transitioning from "increased concern" to "increased concern", but at least for now, it is still far from being possible to directly to intervene.
Marios Hadjikyriacos, senior investment analyst at FX broker XM, wrote in a research note: "There is growing speculation that the Japanese government will intervene in FX to save the yen, although this seems unlikely." "Japan will Individual intervention has to be done because the United States and Europe will not agree to weaken their currencies in this inflationary environment, while Japanese authorities have not even described the moves as 'disorderly' and have not yet signaled action."
