Dollar weakens in early trade today

3 Mar 2023 , 08:51 AM

As market analysts attempted to predict the direction of Federal Reserve policy, the U.S. dollar slipped back from a 2-1/2-month high versus the yen, on Friday, and headed towards its first weekly loss since January against key rivals.

Although it recovered strength on Friday as 10-year U.S. rates declined from a nearly four-month peak close to 4.1%, the yen, which is particularly sensitive to U.S.-Japanese long-term interest rate differentials, threatened to extend a weekly losing streak to seven weeks.

Raphael Bostic, president of the Atlanta Fed, said overnight that ‘slow and steady is going to be the appropriate course of action,’ despite new employment data adding to the recent string of positive news, which helped to deflate the dollar and the frantic surge in U.S. yields.

The dollar index, which compares the value of the dollar to the yen, the euro, and four other major currencies, fell 0.11% to 104.85 from a peak of 105.36 at the beginning of the week, the highest level since January 6. The index has fallen 0.36% since last Friday.

Once Governor Haruhiko Kuroda steps down next month, the Bank of Japan (BOJ) is also anticipated to begin rolling back unprecedented stimulus measures.

Tokyo’s February inflation report above the BOJ’s target for the ninth consecutive month, but the core gauge did slow down from a 42-year peak.

The dollar dropped slightly to 136.575 yen from 137.10 overnight, its highest level since December 20. The dollar is barely above flat for the week, but any rise would continue its winning streak that has been going since mid-January.

After recovering from a two-month low of $1.0533 at the start of the week, the euro increased 0.08% to $1.0606. The increase from last Friday is 0.59%.

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