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© Reuters. File photo: A $5 bill can be seen in this illustrated photo on June 1, 2017. REUTERS/Thomas White/Illustration/File Photo
Author: Tom Westbrook
SINGAPORE (Reuters)-The U.S. dollar/yen exchange rate hit a 15-month high on Friday and several months’ highs against other major currencies as traders bet that strong US labor data may further boost the U.S. dollar.
The employment report will be released at 1230 GMT and is expected to increase by 700,000 people steadily. But there is a lot of discussion that the number will be higher, and it may undermine the assumption that US interest rates can be kept at the lowest level for a few years.
The dollar rose 0.7% against the yen this week and hit its highest point since March 2020 on Friday, as investors reassessed short US dollar positions after months of strong data and a change in the Fed’s tough attitude.
The U.S. dollar rose 0.06% to 111.65 yen in early Asian trade, at $1.1843 per euro, just one step away from the three-month high of $1.1837 hit on Thursday.
The exchange rate against the British pound climbed to a new two-and-a-half-month high of $1.3752, and the exchange rate against the Australian dollar was close to the highest level since December of $0.7467—well above the milestone low reached in May.
Paul Mackel, HSBC’s global head of foreign exchange research, said on the outlook conference call: “Many people are now arguing (arguing) whether the U.S. dollar has indeed bottomed out because the Fed hinted that it might raise interest rates sometime in 2023. .”.
“In addition, it is also a bit nervous whether the U.S. dollar will begin to perform in a more pro-cyclical manner. In other words, if the U.S. data is better than expected, the U.S. dollar will really strengthen as a result.”
The exchange rate in Asia remained stable at 92.549 and has risen by 0.8% so far this week. As the market waits for US data, there is little volatility in other regions.
As the shorts cut their positions, the US dollar index is now up 3.4% from its May low. Some people say that this move will make it vulnerable if the employment data is lower than expected.
ING’s Francesco Pesole said: “The U.S. dollar tends to show an asymmetric response to employment data in 2021, so a miss will result in more downside for the U.S. dollar compared to the upside generated by a stronger-than-expected release.” The number of employees increased by 500,000 to 600,000.
“If our economists’ predictions of positive but below consensus NFP readings prove to be accurate, we expect foreign exchange price movements to have a broad negative impact on the U.S. dollar because some of the Fed’s hawkish expectations have weakened. “Pessole said that he was referring to the U.S. non-agricultural employment data.
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Currency purchase price at 0124 GMT
Describe RIC’s last U.S. closing percentage change year-to-date percentage high price low price
Previous changes
meeting
Euro dollar
1.1844 USD 1.1851 USD -0.05% -3.05% +1.1853 +1.1841
USD/JPY
111.5900 111.5550 +0.04% +8.05% +111.6550 +111.5950
EUR/JPY
132.17 132.15 +0.02% +4.14% +132.2200 +132.1000
USD/Switzerland
0.9258 0.9257 +0.02% +4.65% +0.9261 +0.9258
GBP/USD
1.3759 1.3764 -0.03% +0.72% +1.3772 +1.3752
USD/Canada
1.2440 1.2437 +0.06% -2.28% +1.2444 +1.2438
AUD/USD
0.7464 0.7471 -0.06% -2.94% +0.7470 +0.7461
new Zealand
USD/USD 0.6963 0.6969 -0.07% -3.02% +0.6969 +0.6960
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Tokyo foreign exchange market information from the Bank of Japan
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