Dollar Closes 3-Year High Against Yen As Markets Hold Bets On Fed Cut

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  • U.S. payroll figures low but details show strength
  • Fed cut in November is on track
  • The dollar / yen at its highest since December 2018
  • Pound and Canadian dollar supported by rate hike expectations

TOKYO / HONG KONG, Oct. 11 (Reuters) – The dollar hit its nearly three-year high against the yen on Monday as investors remained confident the U.S. Federal Reserve will announce a cut in its massive bond purchases on next month despite the decline in the US payroll Figures.

Jobs data released on Friday pushed U.S. bond yields higher, and the yen, which is known to be the most sensitive to yield spreads, fell to 112.725 yen to the dollar on Monday in Asian hours – a level last seen in December 2018.

“The dollar could rise to around 113 yen. But to extend its gains to 114 yen, it would take a much larger rise in 10-year US Treasuries to almost 2%, which I don’t think is likely at this point. “said Jun Arachi, senior strategist at Rakuten Securities.

The Japanese currency was also affected by a slight tilt towards riskier currencies, with the British Pound and Australian Dollar both rising slightly against the Greenback, leaving the Dollar Index little changed at 94.154, not far from its highest. Year on year high at 94.504 reached earlier this month.

U.S. currency and fixed income markets are closed for a holiday on Monday, but the benchmark 10-year Treasury yield hit a four-month high of 1.617% on Friday, even after data showed that the US economy created the fewest jobs in nine months in September, significantly underperforming economists’ forecasts. Read more

However, data for August was sharply revised upwards and the unemployment rate fell to its lowest level in 18 months, suggesting that fears of labor shortages remain justified, maintaining concerns about the inflation and giving the Federal Reserve a rationale for cutting back on its emergency stimulus measures that began last year.

“Although the payroll figure is low, when you look at the details the outlook remains strong and nothing would stop the Fed from shrinking next month,” said Shinichiro Kadota, senior currency strategist at Barclays.

The Chinese yuan has not been shaken by ongoing difficulties from Chinese developer China Evergrande Group (3333.HK), even as offshore bondholders prepare to receive news of more than $ 148 million in payments bond coupons looming after the company missed two coupon maturities last month. Read more

The offshore yuan was last at 6.4370 per dollar near its recent range, but still below its 6.422 high reached in September.

The Australian dollar strengthened a little closer to its highest level in a month, helped by high commodity prices and a partial reopening of Sydney, Australia’s largest city. Read more

Concerns about inflation are not confined to the United States, with supply disruptions and rising commodity prices affecting many other countries.

The British pound held steady at $ 1.3634, prolonging its rally from a nine-month low set at the end of last month, given rising expectations that the Bank of England could raise rates. interest in curbing the surge in inflation.

The Canadian dollar changed hands at C $ 1.2466 to the US dollar, after hitting a two-month high of C $ 1.24525 on Friday on surprisingly strong Canadian wage data and high oil prices. Read more

On the flip side, the euro was weak at $ 1.1575, hovering a little above Wednesday’s low of $ 1.1529, its lowest level since July of last year.

In cryptos, bitcoin gained 3.5% to a new five-month high of $ 56,576, extending gains over the weekend, Ether also gained 3% to drop to $ 3,528.

Reporting by Hideyuki Sano, additional reporting by Alun John in Hong Kong Editing by Shri Navaratnam

Our standards: Thomson Reuters Trust Principles.


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