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SINGAPORE (Reuters) – The dollar regained strength on Wednesday, posting modest gains after earlier losses from renewed bets that the Federal Reserve will cut rates this year, while the yen fell above 155 to the dollar and kept intervention risks from Tokyo high .
The yen fell 0.3% to 155.16 per dollar, retreating from its peak of 151.86 reached last week amid perceived intervention by Japanese authorities to support the falling currency.
Analysts said any intervention from Tokyo would only serve as a temporary reprieve for the yen, given that sharp differences in interest rates between the United States and Japan remain.
Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank could take monetary policy action if the yen’s decline materially affects prices, while the country’s Finance Minister Shunichi Suzuki repeated a warning that authorities are prepared to respond to excessively volatile moves. on the foreign exchange market.
“If we saw a sudden, sharp move in the dollar against the yen, I would expect them to come to the market to support the yen. but the risk is clearly there,” said Carol Kong, currency strategist at Commonwealth Bank of Australia (OTC:).
The euro fell 0.13% to $1.0741 and the New Zealand dollar fell 0.17% to $0.5992.
Against a basket of currencies, the dollar rose 0.12% to 105.55, moving some distance from the roughly one-month low it hit last week.
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Investors remain focused on the pace and timing of the Fed’s rate cuts, which are likely to boost currency moves, with the latest weaker-than-expected US jobs data and US central bank policy easing bolstering expectations that rates are likely , will be lower by the end of the year.
While Minneapolis Fed President Neel Kashkari said Tuesday it was too early to say inflation had definitely stopped, it did little to move the market pricing needle toward lower rates.
“The market has shrugged off comments from Minneapolis Fed President Kashkari, who is on the hawkish end of the spectrum and is not voting this year,” said Rodrigo Catril, senior currency strategist at National Australia Bank (OTC).
Elsewhere, sterling fell 0.18% to $1.2487 ahead of a Bank of England policy decision on Thursday that will focus on how soon the central bank can begin cutting rates.
Analysts expect the central bank to leave the door open to cutting interest rates as early as June.
The Australian dollar fell 0.33% to $0.65765, weighed in part by the Reserve Bank of Australia’s less aggressive outlook than expected after it kept interest rates steady on Tuesday.