Dollar falls after jump in US jobless claims; Feed in focus

An employee handles one hundred US dollar banknotes at a bank on June 16, 2022 in Hai’an, Nantong City, Jiangsu Province, China.

Shu Jinbei | VCG | Getty Images

The dollar fell on Friday, affected by the drop in US Treasury yields after the large rise in weekly jobless claims that raised hopes that the peak of US interest rates was near, as the focus turned to the next week full of central bank meetings.

Data on Thursday showed that the number of Americans filing new claims for unemployment benefits rose to its highest level in more than a year and a half last week, though layoffs may not be accelerating because the data covered the Memorial Day holiday, which could have pumped. Some twists.

However, that was enough to bring down U.S. dollar to a more than two-week low against a basket of currencies in the previous session, as investors took the data as a sign of a slowing labor market in the United States.

The dollar index last stood at 103.41 in Asian trading on Friday, after losing more than 0.7% in the previous session, its biggest daily drop in weeks.

The index, which tracks the greenback against six major peers, fell 0.6% for the week, marking its worst week since mid-March.

against the Japanese Yen, the dollar fell to a one-week low of 138.765, tracking the slide in US Treasury yields. He was bringing in $139.27 per dollar.

pointer 10-year Treasury yield It last stood at 3.7317%, after falling 7 basis points on Thursday. the Two years returnwhich usually moves in line with interest rate expectations, settled at 4.5261%.

“We think the US, like many economies, will go through a shallow recession this year. So that will show in the payroll numbers and unemployment claims and those kinds of numbers,” said Jarrod Kerr, chief economist at Kiwi Bank.

in another place, Sterling pound It touched a one-month high of $1.2564, instead kiwi It fell by 0.11%, to $0.6089.

the Turkish lira It fell more than 1% against the dollar to a record low of 23.54 after President Recep Tayyip Erdogan appointed Hafiz Cay Erkan, the chief financial officer in the United States, to head Turkey’s central bank.

“A return to traditional politics seems inevitable given the materially low foreign exchange reserves and 40% inflation,” said Mohamed Elmi, senior portfolio manager for fixed income in emerging markets at Federated Hermes.

An action-packed central bank week

Markets are now turning their attention to next week which will see the Federal Reserve, European Central Bank and Bank of Japan announce interest rate decisions after their respective policy meetings.

The Fed is at the forefront as money markets tend to pause, even though they have a 25% chance that the US central bank will raise interest rates by 25 basis points.

“The slowing US economy gives the Fed room to stall after 500 basis points of successive rate hikes,” said Guillermo Felices, global investment analyst at PGIM Fixed Income.

“The main question for the markets is whether the Fed will just skip an increase in June and resume its tightening campaign in July.”

Meanwhile, a clear majority of economists polled by Reuters expect the ECB to raise key interest rates by 25 basis points on June 15 and again in July before pausing for the rest of the year as inflation holds steady.

the euro It was finally stable at $1.0776, flirting with Thursday’s two-week high of $1.0787. The single currency rose 0.6% for the week and is on track for four straight weeks of losses.

the Canadian dollar It last bought 1.3371 Canadian dollars, not far from the one-month high of 1.3321 Canadian dollars it hit on Wednesday, while the Australian It stood almost near a one-month high of $0.6711.

Both currencies drew support from sudden interest rate increases by their respective central banks this week, prompting markets to revise their expectations for a peak in global interest rates.

The weakness of the Chinese yuan as the deepening downturn in factories added to investor concerns about the country’s fragile economic recovery.

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