Greenback Gains Strength, Yen Declines

9 Aug 2024 , 08:24 AM

On Friday, the dollar stayed near a one-week high against major competitors, as the largest decline in US unemployment claims in nearly a year allayed fears of an impending economic slowdown.

The US dollar extended its gains against the Japanese yen for a fourth day, boosted by a surge in Treasury rates following Thursday’s stronger-than-expected job data, which prompted a reduction in betting on Federal Reserve interest rate cuts this year.

The yen and the Swiss franc, another safe-haven currency, plummeted around one-week lows as Wall Street climbed on a better macroeconomic outlook, while riskier currencies like the Australian dollar and sterling remained elevated after big advances overnight.

Markets have had a turbulent week, fuelled in large part by surprisingly soft U.S. payrolls figures a week ago, which sent global stocks tumbling on Monday, while demand for the safety of assets such as the yen and the Swissie sent the currencies surging to their highest levels since the beginning of the year on Monday.

The dollar was up 0.27% at 147.66 yen as of 1153 GMT, on track for a 0.8% gain this week despite Monday’s sudden 1.5% drop.

It remained unchanged at 0.8670 franc, on track for a 1% weekly increase.

Initial claims for state unemployment benefits declined 17,000 to a seasonally adjusted 233,000 for the week ending August 3, the greatest drop in nearly 11 months.

The odds of the Federal Reserve decreasing interest rates by 50 basis points at its next policy meeting on September 17-18 fell to 54% from 69% on Wednesday, with a 25 basis point decrease being viewed as having a 46% chance, according to the CME Group’s FedWatch Tool.

For feedback and suggestions, write to us at [e-mail]