Even though there is a chance of intervention, the dollar stays near its 32-year high against the yen, while sterling licks its wounds. 

Tokyo – On Wednesday, the dollar stayed close to a 32-year high against the yen while moving up from a two-week low against a basket of major peers. This was due to the possibility that the U.S. Federal Reserve would raise interest rates quickly.

This week, sterling stayed in the middle of its trading range after the Bank of England said it wouldn’t sell any longer-term gilts this year and denied a report from the Financial Times that it would put off quantitative tightening. The euro went down after being close to its highest point in two weeks.

Overnight, the dollar went as high as 149.395 yen, which is the highest it has been since August 1990. It was last trading at 149.305 yen in Asia.

Traders are on high alert for the Ministry of Finance and the Bank of Japan to step back into the market as the currency pair moves closer to the important psychological barrier at 150. A month ago, a cross of 145 caused the first intervention to buy yen since 1998.

Local media said that on Wednesday, Japanese Finance Minister Shunichi Suzuki said that he was checking currency rates more often and with more care.

The dollar index, which compares the dollar to six other currencies like the yen, the pound, and the euro, rose 0.2% to 112.19 after falling to its lowest level since Oct. 6 (111.76). At 114.78 at the end of September, it reached its highest point in many years.

The greenback, which is the most popular safe-haven currency right now, has dropped this week because stocks around the world are going down after some good earnings.

But the Fed’s focus on red-hot inflation, even if it means starting a recession, keeps the market pricing in two more 75 basis point hikes from the Fed this year. This is the main source of support for the stock market.

Financial uncertainty in Britain also makes it hard to tell what will happen in markets around the world.

“We don’t think this is more than a small pause in the dollar’s bull run,” said Sean Callow, a currency strategist at Westpac in Sydney. He expects a retest of last month’s peak in November.

On the yen, “intervention risk remains, since the MOF has already crossed the Rubicon,” Callow said. However, its goal is surely only to limit the size of speculative positioning, not to cause a sustained reversal.

“A round number like 150 will probably be hard to break in the short term,” said Callow. But given that the BOJ is the only central bank in a developed market that still has a negative interest rate policy, it’s hard to see why the pair wouldn’t extend into the 150-155 area, “he added.

At the same time, sterling stayed the same at $1.1318, licking its wounds after falling by 0.34% the day before. On Tuesday, the currency went up at first after the Financial Times said the Bank of England would delay quantitative tightening. However, the currency went down after the bank said the article was “inaccurate.”

The Bank of England (BoE) said that it would start selling some of its huge stock of British government bonds on November 1. However, it would not sell any longer-term gilts this year, which has caused a lot of market volatility since the government’s “mini budget” fiasco.

The British pound will remain weak, says the Commonwealth Bank of Australia (OTC:CMWAY).

“High energy prices and the Bank of England’s rapid tightening of monetary policy will soon put the UK economy back into recession,” Kim Mundy, a strategist at CBA, wrote in a client note, predicting that the BoE will raise interest rates by 1% next month.

“Relative economic performance will remain a weight on GBP,” she said. “This will hurt the value of the currency, even though fiscal uncertainty has been getting less of a problem lately.”

The euro fell 0.24 percent to $0.9836, falling from Tuesday’s high of $0.98755, which was the last time it was that high since Oct. 6.

In a poll by Reuters, economists say that the European Central Bank will raise rates by another 75 basis points on Thursday of next week.

The New Zealand dollar stayed high after Tuesday’s shockingly high consumer price data, which makes it more likely that the Reserve Bank will keep tightening aggressively. The last time it was traded, the currency was up 0.08 percent at $0.56905, close to the previous session’s two-week high of $0.5719.

The Australian dollar was traded for $0.6311, which was about the same as Tuesday.