Dollar Stabilized at High Levels; Yen Gains After Intervention

The US dollar rose in early European trading on Friday, continuing to be in demand after the Federal Reserve's hawkish stance, while the yen rebounded after Japanese authorities intervened.

At 02:50 ET (06:50 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% to 111.248, just below the two-decade high of 111.81 reached in the previous session. USD/JPY fell 0.1% to 142.28, extending a decline of more than 1% after Japanese authorities on Thursday intervened in markets to support the yen for the first time since 1998. The intervention followed the Bank of Japan's decision to maintain its ultra-easy monetary policy. This was in direct contrast to the US Federal Reserve's stance on Wednesday when it raised interest rates by 75 basis points, signaling that interest rates will rise further and stay higher for longer than markets had previously priced in. "With the Fed becoming even more hawkish and the BoJ still printing money, the Japanese government seems to have wanted to stop a quick run to 150," ING analysts said in a note. "The Japanese authorities may be fighting the currency market for the next 6-9 months as the dollar remains strong." Elsewhere, a number of major currencies neared fresh lows against a rising dollar, which benefited from rising Treasury yields following the Fed's policy-setting meeting. The EUR/USD pair fell 0.2% to 0.9813, not far from the 20-year low of 0.9807 it hit overnight. September purchasing managers' indices for the Eurozone will be released later in the session and are likely to show that the regional economic outlook has darkened. The GBP/USD pair fell 0.3% to 1.1223 from a 37-year low of 1.1213 hit overnight, with the Bank of England's move to raise interest rates by 50 basis points on Thursday having little impact on the beleaguered pound. "What stands out most about this decision is that the Bank of England's Monetary Policy Committee has become more divided," ING added, "for the first time since the great financial crisis we have a three-way split." "For investors, this growing divide should be seen as a sign that market expectations are unlikely to be met." Risk-sensitive AUD/USD fell 0.3% to 0.6621, USD/CNY rose 0.3% to 7.0981 and the yuan hit a two-year low against the greenback, while USD/TRY rose 0.3% to 18.3930 as the lira traded near all-time lows after the Turkish Central Bank reversed the global tightening trend with another surprise 100 basis points rate cut. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!