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While major U.S. stock indexes rose on Wednesday, the U.S. dollar achieved its highest level versus the Japanese yen in almost 38 years, raising market concern that Japan may intervene to support the currency.
Authorities were “seriously concerned and on high alert” about the yen’s fast slide, said Masato Kanda, Japan’s senior currency ambassador.
The U.S. dollar rose 0.7% to 160.697 yen, its highest level since December 1986. The euro hit 171.79 versus the yen, its highest level since September 1992. Last up 0.3% at 171.625.
“The market seems to be front-running itself with respect to BOJ (Bank of Japan) policy,” said Eugene Epstein, Moneycorp’s North American structuring head in New Jersey.
Investors rushed to dollar-based assets to take advantage of 5.25% to 5.5% U.S. interest rates, hammering the yen. That is substantially higher than Japanese rates, which were hiked this year to 0% to 0.1%.
The dollar index rose 0.38% to 106.07, while the euro fell 0.34% to $1.0677.
Nvidia rose 0.2% while Amazon Inc rose 3.9% on Wall Street. The S&P 500 consumer discretionary index rose 2%.
Dow Jones Industrial Average increased 15.64 points, or 0.04%, to 39,127.80, S&P 500 gained 8.60 points, or 0.16%, to 5,477.90, and Nasdaq Composite gained 87.50 points, or 0.49%, to 17,805.16.
Wall Street’s major indexes gained slightly on Wednesday as investors huddled ahead of a presidential debate and a critical inflation data.
Fed officials advise prudence on rate decreases. This week, Fed Governor Michelle Bowman reaffirmed that maintaining the policy rate unchanged “for some time” could moderate inflation.
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As foreign inflation surged, U.S. Treasury rates climbed.
Australian consumer inflation reached a six-month high in May.
U.S. 10-year note yields climbed 9.1 basis points to 4.329% from 4.238% late Tuesday.
Brent rose 24 cents to $85.25 per barrel. West Texas Intermediate futures rose 7 cents to $80.90 a barrel.
Gold fell to its lowest level in two weeks. Gold fell 0.8% to $2,301.16 per ounce.
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