FILE PHOTO: A man rides a bicycle past an electronic screen displaying the current Japanese Yen exchange rate against the U.S. dollar and other foreign currencies in TokyoTOKYO - The yen continued to drift lower against the dollar on Tuesday as gaping interest rate differentials weighed on the currency, despite fresh warnings from Japanese officials following two rounds of suspected dollar-selling intervention last week.
However, with a Federal Reserve rate cut likely to take some time and the BOJ taking a cautious approach to tightening following its first rate hike since 2007 in March, the gap between ultra-low Japanese long-term yields and their U.S. counterparts is a vast 370 basis points. The U.S. dollar index - which measures the currency against six major peers, including the yen, sterling and euro - was little changed at 105.13, after dipping as low as 104.52 on Friday.The Aussie edged up 0.17% to $0.6636, heading back towards the high of $0.6650 from Friday, a level last seen on March 8.
"A different set of central bankers would have had the policy rate higher sooner on the same set of data," Taylor Nugent, a markets economist at National Australia Bank, wrote in a note.