The U.S. dollar edged higher in early European trading Friday, remaining in demand after the Federal Reserve’s hawkish stance, while the yen was buoyant after the intervention of Japanese authorities. USD/JPY fell 0.1% to 142.28, continuing to fall after a drop of more than 1% on Thursday after Japanese authorities intervened in markets to support the yen for the first time since 1998. The intervention followed the decision of the Bank of Japan to maintain its ultra-easy monetary policy.
The U.S. dollar strengthened in early European trade Friday, while the Chinese yuan broke through a crucial threshold as concerns over rising interest rates and a potential recession dented risk appetite. Both the World Bank and the International Monetary Fund warned late Thursday of an impending global economic slowdown, with Indermit Gill, the World Bank's chief economist, saying he was concerned about "generalized stagflation," a period of low growth and high inflation. Fears of a global recession are growing with many central banks aggressively tightening monetary policy to combat inflation at historic levels.
By Ambar Warrick