Dollar flat after strongest growth due to employment data
2023.02.06 02:46
Dollar flat after strongest growth due to employment data
By Tiffany Smith
Budrigannews.com – On Monday, a strong jobs report in the United States suggested that the Federal Reserve might stay hawkish for a while longer. On the other hand, news that Bank of Japan Deputy Governor Masayoshi Amamiya might be the next governor hurt the yen.
The newspaper said, citing unidentified government and ruling party sources, that Prime Minister Fumio Kishida’s administration was deciding on two new deputy governors and Haruhiko Kuroda’s successor.
Yoshihiko Isozaki, Deputy Chief Cabinet Secretary, stated at a news conference on Monday that the Nikkei report was false.
After reaching three-week lows of 132.60 earlier in the session, the yen fell 0.42 percent to 131.75 per dollar.
According to Saxo Markets’ strategists, “Amamiya has helped Kuroda on monetary policies since 2013 and is considered the most dovish among the contenders, which is thrashing hopes that BOJ policy normalization could progress under the new chief.”
The loose policy settings of the BOJ have come under increasing fire for distorting market function from a variety of sources, including opposition politicians and traders.
Amamiya drafted Kuroda’s asset-buying plan in 2013 and consistently advocated for maintaining extremely low interest rates. However, he also stated in July that the BOJ must “always” consider how to exit ultra-loose monetary policy.
Nonfarm payrolls increased by 517,000 jobs last month, according to the closely watched employment report released on Friday by the United States Labor Department. A Reuters poll of economists had predicted a gain of 185,000.
On Monday, the dollar jumped higher and held steady. The U.S. currency reached a nearly 4-week high of 103.22 against a basket of currencies before falling to 103.03. On Friday, the index had increased by 1.1%.
Investors have priced in a more dovish course of action going forward as a result of the Fed’s announcement on Wednesday that it had achieved a turning point in the fight against inflation.
However, investors are questioning whether the Federal Reserve is nearly finished with its policy of monetary tightening after the shocking payrolls number and the rebound in the United States services industry in January.
Tapas Strickland, head of market economics at National Australia Bank (OTC:), stated, “The worry of course is that the much better than expected data is bad news if the Fed sees this as bolstering its case for two more hikes and keeping rates elevated for longer.”
According to Citi strategists, Fed Chair Jerome Powell and the committee as a whole are getting more excited about the possibility of a “soft landing,” in which inflation falls even though the labor market is strong.
Citi said, however, that the report from Friday ought to make the Fed even more concerned about the fact that labor markets are too tight for at-target inflation to be consistent with.
Before cutting rates in the second half of the year, traders are anticipating that the Fed’s policy rate will reach a peak of 5.05% in June.
After a U.S. military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday, escalating tensions between the United States and China contributed to an increase in the safe-haven dollar.
At $1.0795, the euro was up 0.02%. Friday saw a 1 percent decline in the single currency of Europe, reaching $1.07815, nearly three weeks ago.
After hitting a one-month low of $1.2031 earlier on Monday, sterling last traded at $1.2057, up 0.05% on the day.
While the was down 0.08% to $0.633, the Australian dollar gained 0.36 percent to $0.694.
