The yen just hit a 24-year low against the dollar as economic data and expectations of continued Fed tightening push the greenback to rally
- The yen dipped 0.75% to a 24-year low of 140 against the greenback on Thursday amid expectations of continued Fed tightening.
- Loose monetary policy in Japan has kept rates low while other central banks are hiking.
The Japanese yen just hit a 24-year low against the US dollar, as new economic data and expectations of continued Fed tightening continue the greenback's impressive rally.
The value of the yen dipped 0.75% to 140 against the dollar on Thursday after fresh indicators showed the US economy is still running at a robust clip, giving the central bank more leeway to raise rates aggressively.
Unemployment claims fell to their lowest levels in two months, and the US manufacturing Purchasing Managers' Index remained around 53. That marks August as the 27th straight month of economic expansion since mid-2020, according to the Institute for Supply Management, despite aggressive rate hikes already seen this year.
The 10-year Treasury yield jumped 13.5 basis points to 3.267%. That followed an earlier spike after monthly job openings data on Wednesday unexpectedly increased, suggesting the labor market remains tight.
The yen's latest slide also came nearly a week after Federal Reserve Chairman Jerome Powell spoke at Jackson Hole, where he emphasized the Fed's resolve to bring down inflation with higher rates.
Other rivals to the US currency have also been crushed as markets anticipate more Fed rate hikes to come. Recently, the euro to slipped below parity with the dollar for the second time this year, and the British pound fell to $1.15 dollars, its lowest level since the pandemic.
The greenback, meanwhile, has jumped to a 20-year high. The US Dollar Index, which measures the value of the dollar against a basket of currencies, ticked up 0.87% to $109.81, its highest level since 2002.
The effects of Fed tightening have also been exacerbated by relatively loose monetary policy from the Bank of Japan, which has kept its rates low while other central banks are hiking.
The Fed is expected to keep on its tightening regime, with analysts expecting an increase of 50 to 75 basis points after policymakers meet September 20-21.
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