The U.S. dollar struck a new two-month high level in opposition to the Japanese yen today, while resource connected currencies like the Australian dollar dropped considerably versus the dollar, as Chinese authorities took the yuan lower. The U.S. dollar increased to 125.28 yen, its top trading level since June 8th, before pulling back to ¥124.87. The dollar was trading at ¥125.13 yesterday afternoon in New York. The Australian dollar has dropped to $0.726 and ¥90.53 today, down from US$0.7301 and ¥91.39. The currency briefly traded at $0.7216 earlier today, its lowest trading level since 2009.
China guided its currency even lower today after it impacted global markets yesterday with its decision to drive the yuan down 1.9% in opposition to the U.S. dollar, the biggest devaluation in many years. The People’s Bank of China placed its fixed rate at 6.3306 a dollar, in comparison with Tuesday’s closing price of 6.3231 and fixed rate of 6.2298. As a result, dollar buying is strong, especially in opposition to resource-related currencies. Dollar buying did slow for a moment, but European investors would soon cause it to move again.
The U.S. dollar could possibly continue to strengthen in opposition to resource connected, risk vulnerable currencies that are prone to react to China’s actions or falling oil prices, but there might not bee much room to climb versus the yen and the euro while investors are concerned about an upcoming interest-rate increase in the United States. The U.S. dollar has weakened in opposition to the euro, which increased to $1.1089 at midday, up from US$1.1042. The WSJ Dollar Index is down 0.06% at last check to 88.93.
Among other currencies, the New Zealand dollar is down to $0.653 and ¥81.53 at midday, while the Canadian dollar has weakened versus the U.S. dollar, which climbed to $1.3111 Canadian dollars. The Nikkei Stock Average lost nearly 1.6% on the day following China’s most recent announcement, while the Shanghai Composite Index traded down 0.3%.