In anticipation of a flood of economic data this week, traders were cautious with their dollar wagers on Tuesday, as the yen battled close to levels that prompted intervention last year. After falling 0.2% on Monday, the dollar index, which compares the value of the dollar to six significant rival currencies, slid 0.077% to 103.85. The index increased by 2% this month as strong economic data strengthened predictions that interest rates may rise further. That opinion gained further traction after Fed Chairman Jerome Powell suggested on Friday that additional rate rises might be necessary to lower the still-too-high inflation, despite his pledge to proceed cautiously at upcoming meetings.
allowed for some ambiguity. This week, the focus will be on a number of economic indicators, including payrolls and personal consumption spending, since the U.S. central bank has noted that the interest rate path will be significantly contingent on data. The July job vacancies data will be presented first later in the day. According to economists surveyed by Reuters, job opportunities will total 9.465 million, a little decrease from June. Stronger than anticipated jobs statistics may increase market expectations for another Fed rate hike and raise the value of the dollar, according to Carol Kong, currency strategist at Commonwealth Bank of Australia. According to the CME FedWatch tool, markets are pricing in a 78% chance of the Fed keeping interest rates unchanged next month.
revealed, but the likelihood of a hike in the November meeting has increased from 42% to 62% since last week. According to CBA’s Kong, “our base case is that the Fed has finished its tightening cycle and will start its easing cycle in March 2024.” The risks are weighted towards greater tightening and a delayed start to the easing cycle, according to Powell’s hawkish remarks at Jackson Hole. While the yen flounders close to a nine-month low against the dollar, traders everywhere are keeping a close eye out for any indications of a potential intervention from Japanese authorities. During Asian trading hours, the yen edged up 0.12% to 146.36 per dollar but held close to 146.75, its nadir level since November 9. Last September, when the dollar surpassed 145 yen, Japan intervened in the currency markets by purchasing the yen, which caused the pair to drop to about 140 yen. For the year, the yen has fallen 11% against the dollar. Low yields in Japan have made the country’s currency a popular target for short sellers and financing trades, and the growing interest rate differential between Japan and the United States has contributed to the yen’s ongoing weakening. According to Charu Chanana, market strategist at Saxo, “we could see increasing pressure on yen if U.S. data, and consequently U.S. yields, continue to be firm.”
Given Ueda’s absence from any currency-related statements at the Jackson Hole conference and the lack of any verbal intervention thus far, Chanana claimed that the intervention threat had subsided at sub-150 levels. In advance of this week’s euro zone inflation statistics, the euro was up 0.11% at $1.0829. The euro has increased for two days in a row, moving away from the two-month low it reached last week. Sterling last traded at $1.2616, up 0.10% on the day and off recent two-month lows. The New Zealand dollar dropped 0.02% to $0.591 and the Australian dollar increased by 0.03% to $0.643.
Exchange rates at 2:00 GMT Description YTD Pct High Bid Low Bid RIC Last U.S. Close Pct Change Earlier Change Session Dollar/Yen 146.3450 Euro/Dollar $1.0834 $1.0819 +0.14% +1.11% +1.0838 +1.0817 Euro/Yen: 146.5350 -0.13% +11.52% +146.5000 +146.3500 Dollar/Swiss 0.8828 0.8840 -0.06% -4.46% +0.8837 +0.8829 Dollar/Canadian 1.2624 1.2599 +0.20% +4.39% +1.2626 +1.2601 Sterling/Dollar 0.6435 0.6430 +0.09% -5.60% +0.6439 +0.6422 NZ 1.3599 1.3599 -0.02% +0.35% +1.3605 +1.3592 Aussie/Dollar Dollar/Dollar All spots: 0.5913 0.5910 +0.08% -6.86% +0.5917 +0.5904 Tokyo identifies Europe Volatilities Tokyo Foreign Exchange