Home ForexArticles The dollar falls while awaiting the employment report; Yen On Track For Strong Weekly Gains By Investing.com

The dollar falls while awaiting the employment report; Yen On Track For Strong Weekly Gains By Investing.com

by SuperiorInvest

Investing.com – The U.S. dollar fell slightly on Friday, with activity subdued ahead of the widely watched U.S. monthly jobs report and the Japanese yen set for its next week in more than a year.

At 04:25 ET (0825 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 105.110, on track for its worst week in almost two months.

The dollar falls while waiting for payrolls

The dollar has been on the defensive for most of this week, after the Federal Reserve chair largely ruled out rate hikes, indicating that the US central bank is still leaning towards eventual rate cuts, even Yes, they may take longer than initially expected.

“The post-FOMC bias has been sharply bearish for the dollar and despite today's US payrolls risk event, markets have continued to restrict long dollar positions yesterday and overnight,” ING analysts said in a note.

Attention now turns to the closely watched monthly US employment report.

It likely increased by 238,000 jobs last month after increasing 303,000 in March, while it is expected to remain below 4% for the 27th consecutive month.

Powell made clear the importance of upcoming economic data for policy decisions after the US central bank left interest rates unchanged on Wednesday.

Financial markets are still waiting for the central bank to begin its easing cycle in September, but strong numbers could see this window begin to close.

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“Overall, our 210,000 jobs call means we don't expect today's data to dent the dollar's bearish momentum as markets can fully price in a cut in September and keep short-term dollar interest rates limited. “added ING.

Eurozone manufacturing remains weak

In Europe, it rose 0.2% to 1.0743, helped by recent dollar weakness.

However, recent economic news out of the eurozone has hardly been helpful, falling 0.3% month-on-month in March, according to data released on Friday.

The eurozone manufacturing sector remained in contraction territory in April, according to Thursday's final statement, while the VDMA association reported that German manufacturers deepened a decline in their order books in March.

It has announced a rate cut in June, but there remains a lot of uncertainty about what will happen to monetary policy after this.

traded 0.2% higher at 1.2555, following the release of the figure.

This showed an increase to 55.9 in April, from 53.1 the previous month, suggesting that the UK's dominant services industry remains in a healthy state, potentially offering the Bank of England room to delay cuts to services. interest rates.

Yen on track for strong weekly gain

In Asia, it fell 0.2% to 153.26, and the pair is on track to post a weekly loss of more than 3%, the biggest since December 2022.

Japanese authorities have been linked with intervention to support its currency this week to the tune of some 9.16 trillion yen ($59.8 billion), as data from the Bank of Japan suggests.

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These forays into the currency market have tended to occur during periods of low liquidity, with the country on vacation on Monday, while the second attempt occurred on Wednesday night after Wall Street closed.

“The second round of yen intervention in a week, deployed after the FOMC was less aggressive than expected on Wednesday, has sent markets the message that this time the Finance Ministry is less tolerant of a yen depreciation. after the intervention,” said ING. .

Asian currencies overall rose slightly, taking advantage of the dollar's decline overnight.

The pair rose 0.3% to 0.6579, as markets positioned themselves for potentially aggressive signals starting next week. Better-than-expected Australian inflation readings caused markets to largely discount expectations of any rate cuts by the RBA in 2024, offering the Australian dollar some strength.

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