Firm dollar puts yen within striking distance of 150

LONDON: The dollar was steady on Monday but remained close to a 10-month peak as investors positioned for U.S. interest rates staying higher for longer, while the yen slid towards 150 per dollar and near a one-year low, putting traders on watch for intervention.

The yen eased to 149.83 per dollar, its weakest in over 11 months, moving ever closer to the 150 mark that some traders believe could prompt intervention by Japanese authorities, similar to their action last year, to support the currency. "For the yen to sustainably turn, the Bank of Japan needs to move away from its very loose monetary policy," said Dane Cekov, senior FX strategist at Nordea.

"If the yen breaks 150 per dollar, which I think is likely, and verbal intervention is not followed by action then we could see dollar-yen at 155." A summary of opinions at the Bank of Japan's September meeting out on Monday showed policymakers discussed various factors that must be taken into account when exiting ultra-loose policy, while Finance Minister Shun'ichi Suzuki said they were closely watching FX moves with a "strong sense of urgency".

In the broader currency market, sterling was last 0.1% lower at $1.2189, having slid nearly 4% against the dollar in the third quarter. The euro was little changed at $1.0574, after ending the previous quarter with a 3% fall, its worst performance in a year.

European Central Bank vice-president Luis de Guindos told the Financial Times that it was "premature" to discuss interest rate cuts, warning that getting inflation back to 2% will not be easy. The U.S. dollar index edged back from its recent 10-month high and was last at 106.21, after clocking its best quarterly performance in a year thanks to persistently hawkish Federal Reserve rhetoric and a surge in U.S. treasury yields.

The U.S. 10-year yield is up another 5 basis points on Monday at 4.619%, close to a 17-year peak of 4.688% reached last week. "I'd rather be in dollars at the moment than euros or pounds or others," said Jarrod Kerr, chief economist at Kiwibank. "I think the dollar will find a bit more support."

The U.S. Congress late on Saturday passed a stopgap funding bill with overwhelming Democratic support in a bid to avoid the federal government's fourth partial shutdown in a decade. "Historically, shutdowns are noise," Nordea's Cekov said. "They don't really make a dent for markets or the economy."

Elsewhere, the Australian dollar slid 0.4% to $0.6413, while the New Zealand dollar edged 0.1% lower to $0.5992, as traders looked ahead to rate decisions from their respective central banks this week. In cryptocurrencies, bitcoin was trading above $28,000 for the first time since August after a weekend rally took the cryptocurrency as high as $28,451, its highest level since August 17.