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HONG KONG – The yen hit a three-year low on Tuesday, extending a sharp slide as traders raised demand for the Japanese dollar as energy prices rose and as they doubled down on expectations. US rates will be well ahead of their peers.

The yen, nursing losses after the worst session against the dollar in five months, eased another 0.1% to 113.48 per dollar in early Asia trade, its weakest since December 2018, shedding 1% on Monday.


The Japanese currency crisis helped the dollar remain stable against a basket of major peers, even as the Australian dollar continues to rise on rising energy prices and a surge in iron ore.

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The dollar index, which measures the greenback against a basket of peers, was at 94.4, having touched its one-year high of 94.504 at the end of September.

“What we are seeing in the currency markets is a combination of the outlook for the Federal Reserve – mass markets are expecting a slim announcement in November – and what is happening with commodities with a very broad rally at the moment. It is,” said Kim Mundy, currency strategist and senior economist at the Commonwealth Bank of Australia.

It said that these factors were affecting the yen, because Japan is a net energy importer “and therefore increasing energy prices is effectively a tax on consumption” and because it “reiterates the fact that the Bank of Japan may be the last Will be one of the major central banks. Also consider easing the overly liberal monetary policy.”

Japan’s wholesale prices rose 6.3% in September from a year earlier, as raw material costs continued to rise, data published Tuesday showed.

The yen is also sensitive to growth in US yields, as domestic rates near zero. The benchmark 10-year Treasury yield extended gains on Tuesday and stood at 1.6136%, their highest since June and is up 30 bps in three weeks.

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On Monday, US crude rose to $82.18 a barrel, the highest level since late 2014, and Brent crude hit a three-year high.

The Australian dollar held steady at $0.7342 a day after hitting a one-month high, with other commodity prices also firming up.

The inflationary impact of rising energy prices has strengthened the case for the US Federal Reserve to announce a tapering of its massive bond buying program in November, raising the prospect of a hike in interest rates through the end of 2022. Even though the jobs figures published last Friday missed expectations.

Policymakers at other central banks also have price concerns in mind, with the Bank of England indicating it will raise interest rates to curb inflation, supporting sterling, even as the British economy grapples with high energy costs. Be.

The pound hit a two-week high of $1.3673 on Monday and then retreated slightly to $1.3586.

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However, the euro held near its lowest level in over a year, gaining $1.1550. South Korean winnings fell for the first time in 14 months to 1,200 per dollar after the Bank of Korea kept interest rates stable after hiking in August.

In crypto, bitcoin hit a five-month high, falling nearly 1% to $56,800 in Asian trading. Ether, the world’s second largest cryptocurrency, fell 1.54% to $3,489.