Dollar is at its highest level in 6 months against the yen

The dollar touched a six-month high against the yen on Tuesday amid the continuing debt ceiling crisis in the United States and growing expectations that interest rates there will remain higher for a longer period.

The dollar rose to a six-month high of 138.80 against the yen in early Asian trade, reflecting the stark contrast between the Federal Reserve’s continued tightening approach and the Bank of Japan’s ultra-loose policies.

“Markets expect the Federal Reserve to keep interest rates higher for a longer period … Inflation in the United States is still well above target,” said Tina Teng, market analyst at CMC Markets.

“I don’t think the Federal Reserve will start cutting interest rates anytime soon,” she added.

The euro fell 0.05 percent to $1.0808, down about two percent since the beginning of the month until now, after two consecutive months of gains.

As for the pound sterling, it increased 0.02 percent to 1.2440 dollars.

Investor sentiment is affected by concerns related to the approaching deadline for the debt ceiling in the United States, which undermined risk appetite and supported the dollar as a safe haven.