Last Friday, the US Dollar rose versus the Japanese Yen, regaining its footing after taking a hit when North Korea fired a missile over Japan into the Pacific Ocean, ratcheting up tensions after Pyongyang’s recent test of a powerful nuclear bomb.
The Dollar was unlikely to see any fall against the Yen, especially after the latest upbeat US consumer inflation data bolstered prospects that the Fed could raise rates again by year-end. Consumer Price Index rose 0.4% last month after edging up 0.1% in July. August’s gains are the largest in seven months and lifted the year-on-year increase in the CPI to 1.9% from 1.7% in July.
Meanwhile, the Sterling jumped against the US Dollar last Thursday after the Bank of England (BoE) warned interest rates were likely to rise for the first time in more than a decade in the “coming months”. Sterling initially dipped on the interest rate decision, as markets reacted to the fact that only two BoE officials had voted for an immediate rate hike.
However, policymakers said that a rate rise was likely to be needed soon if the economy keeps growing and inflationary pressures continue to build, saying their tolerance for target inflation was lessening.
On Thursday as well, the Swiss Franc tumbled after Switzerland’s Central Bank softened its language on the currency’s valuation, though it stood firm on its ultra-easy monetary policy stance. The Swiss National Bank (SNB) ditched its three-year mantra that the Franc was “significantly overvalued” and said that the currency remained highly valued. The SNB retained its negative rates and said it persists ready to intervene in the currency markets to rein in the Franc, whose soaring valuation it has long fought to restrain.