Rate hike talk boosts yen; bonds down
Dollar sinks to one-month low against Japanese currency as speculation builds that BOJ may raise rates.
NEW YORK (CNNMoney.com) - The dollar continued to slide against the yen Monday, hitting a one-month low, as speculation builds that Japan will soon raise interest rates and begin to tighten up its loose monetary policy. Bond prices made modest gains.
The dollar bought ¥116.08, down from ¥116.86 late Friday. The dollar rose against the euro however, with the euro buying $1.1846, down from $1.1868 in the previous session. Japanese Economics Minister Kaoru Yosano said Sunday the Bank of Japan should feel free to end its easy policy, raising speculation that the government -- which long warned against a premature shift -- is now supporting the move. Investors think the BOJ could start the process of an exit from its five-year-old policy of flooding the financial system with excess cash as early as next week's meeting. Japan has kept its interest rate at or near zero for years in an effort to revive a sluggish economy and fight deflation. But higher interest rates should make Japanese investments more attractive, boosting demand for the yen. In Treasuries, bonds prices edged lower ahead of Tuesday's reading on economic growth and consumer confidence. The benchmark 10-year note slipped 5/32 to 99-7/32, yielding 4.59 percent, up slightly from 4.58 percent late Friday. The 30-year bond lost 14/32 to 99-3/32, yielding 4.55, up from 4.52 percent in the previous session. Bond prices and yields move in opposite directions. The five-year note was down three ticks to yield 4.65 percent, and the two year note was flat, to yield 4.73 percent. -- Reuters contributed to this report _____________ For bond charts, click here |
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