The dollar pushed the yen deeper into intervention territory on Thursday as a resilient U.S. economy underscored the need for higher-for-longer interest rates, while a strikingly ultra-dovish Bank of Japan struggled to defend its policy stance.
"We've got the U.S. staying really resilient still, under the weight of high interest rates," said Carol Kong, a currency strategist at Commonwealth Bank of Australia .
That spells trouble for the yen, which has struggled in the face of growing interest rate differentials since the Fed began its tightening cycle last year, while the BOJ continues to maintain ultra-low interest rates in Japan. "We expect 25-basis-point rate hikes in both September and November, for a peak policy rate of 5.75%," said Wells Fargo economist Nick Bennenbroek of the Bank of England's monetary policy outlook. "Our view remains for slower UK growth and, eventually, a mild UK recession."The Australian dollar fell as much as 0.9% to a low of $0.6365 after the release of its employment figures, while its New Zealand counterpart slid more than 0.5% to $0.
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