The dollar remains weak in early trade

10 Jul 2023 , 12:11 PM

The market’s expectations for how far the Federal Reserve would need to hike rates were set back by disappointing U.S. jobs data on Monday, and attention in Asia that day was focused on China’s release of inflation data.

According to data released on Friday, the U.S. economy created 209,000 new jobs last month, which was the weakest gain in 2-1/2 years and the first time in 15 months that payrolls fell short of forecasts.

That caused the yen and sterling to rise on Friday while the dollar fell versus a basket of currencies by almost 1%.

After rising 1.4% on Friday as a result of the dollar’s dip and a drop in U.S. Treasury yields, the Japanese yen last traded at 142.30 to the dollar in early Asia trade on Monday. 

Due to Japan’s interest rates being fixed at or close to zero, the dollar/yen pair is particularly sensitive to changes in U.S. yields. The British pound also strengthened, closing at $1.2829 from Friday’s over-a-year high of $1.2850 as speculation grows that the UK’s persistent inflation would compel the Bank of England to hike interest rates to a 25-year high of 6.5% by December.

The U.S. dollar index increased 0.09% to 102.38 but remained close to Friday’s two-week low of 102.22, while the euro slightly declined to $1.0958, erasing part of its 0.7% gain from the previous day.

The New Zealand dollar dropped 0.16% to $0.6199, while the Australian dollar declined 0.14% to $0.6683, typically used as a liquid substitute for the yuan.

The offshore yuan, which has been under pressure recently due to the slowing economic recovery in the nation, was last slightly weaker at 7.2341 per dollar.

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