Kevin Buckland
TOKYO (Reuters) – The dollar hovered near a one-week high against major rivals after U.S. jobless claims fell the most in almost a year on Friday, easing fears of a coming recession.
The yuan rose on stronger-than-expected inflation data and firmer official exchange rate fixing.
Stronger-than-expected employment data on Thursday spurred the Federal Reserve to reduce bets on interest rate cuts this year, and U.S. Treasury yields soared, supporting the dollar’s three-day rebound against the yen.
The Japanese yen and fellow safe-haven Swiss franc hovered near one-week lows, with Asian stocks building on overnight gains on Wall Street, while riskier currencies such as the Australian dollar and British pound remained elevated.
Markets have had a tumultuous week, largely due to unexpectedly weak U.S. non-farm payrolls data a week earlier, which sent global stocks tumbling while demand for the safety of assets such as the Japanese yen sent currencies surging to their highest levels since the start of the year on Monday. Best of the year.
The dollar edged down 0.1% against the yen to 147.08 yen by 0450 GMT, and despite Monday’s 1.5% plunge, it was still on track to gain around 0.4% this week.
The Swiss franc fell 0.1% to CHF0.8659, with a weekly gain of 1% expected.
Initial claims for state unemployment benefits fell by 17,000 to a seasonally adjusted 233,000 in the week ended Aug. 3, about the largest drop in 11 months. Economists polled by Reuters expected 240,000 jobless claims in the latest week.
The probability that the Fed will cut interest rates by 50 basis points at its next policy meeting on September 17-18 fell to 54% from 69% the day before, and the probability of a 25 basis point rate cut is currently seen at 46%, according to Chicago (Nasdaq: FedWatch) tool.
Taylor Nugent, senior market economist at National Australia Bank (OTC:), said: “While claims data is volatile, especially at this time of year, the data helps ease concerns about an accelerating deterioration in the labor market. worries.
He said sharp gains on Wall Street spurred flight from the yen and Swiss franc, an “unusual reaction to such a volatile weekly report… underscoring the market’s sensitivity to labor market indicators after weak employment data on Friday”.
Is the unwinding of Japanese yen short positions over?
The yen has soared this month, hitting its highest since Jan. 2 on Monday at 141.675 against the dollar, as short positions snowballed as the Bank of Japan unexpectedly raised interest rates amid weak U.S. economic indicators.
Data from the Commodity Futures Trading Commission later on Friday will provide a clearer indication of whether the unwinding has ended.
The gauge fell 0.1% to 103.17 against the yen, Swiss franc, euro, pound and two other currencies after three consecutive days of gains. The index briefly rose to 103.54 points overnight for the first time since August 2, but ended trading little changed from a week ago.
The euro was little changed against the dollar, at $1.0921, up 0.1% from a week ago. On Monday, the currency surged to $1.1009 for the first time since January 2.
GBP/USD was steady at $1.2756, having gained 0.49% overnight, pulling it back from more than one-month lows. However, the index is still set to fall 0.4% this week, which would be its fourth consecutive weekly decline.
AUD/USD hit $0.6604 for the first time since July 24 before settling at $0.6595, as hawkish comments from the Reserve Bank of Australia governor a day earlier provided additional support. It rose 1.24% this week.
The New Zealand dollar hit a three-week high of $0.6035 against the greenback and was last up 0.2% at $0.6026. Despite the fall in inflation expectations, traders now see an 80% chance of a quarter-percentage point rate cut when the central bank sets policy on Wednesday.
USD/USD rose about 0.3% to 7.1651 in offshore trading. China’s consumer price index increased by 0.5% year-on-year in July, accelerating from the 0.2% increase in June and exceeding the 0.3% increase predicted by economists.
Elsewhere, leading cryptocurrency Bitcoin hit a one-week high of $62,717 and was last up about 3.3% at $61,500. It’s up about 4% this week.
