US dollar weakens in early trade today

10 Mar 2023 , 08:41 AM

On Friday, US dollar’s  appreciation was halted as a rise in unemployment claims in the US suggested that labor market conditions may be easing. This tempered expectations for more aggressive rate hikes from the Federal Reserve in the future.

The Bank of Japan (BOJ) will announce its monetary policy decision at the conclusion of a policy meeting, the last to be presided over by outgoing BOJ Governor Haruhiko Kuroda before his departure in April. In Asia, trading was muted as markets remained on edge.

Early Asian trading saw little movement in the yen, which last traded 0.2% higher at 135.89 to the dollar after earlier in the week hitting a nearly three-month low.

The BOJ is anticipated to keep its ultra-low interest rates on Friday and avoid making significant adjustments to its contentious bond yield control policy, leaving options open before a leadership shift in April.

The BOJ has continued to be extremely dovish, while expectations for interest rates in the US have increased. As a result, the yen has come under downward pressure once more in recent weeks.

As a result, the yen has declined from its January highs and reversed a surge that had accompanied the BOJ’s surprise adjustment to yield curve control in December.

 US dollar slightly declined on Friday in other markets.

The euro gained 0.13% to $1.0595, while the sterling gained 0.05% to $1.1932, both moving away from Wednesday’s multi-month lows.

Kiwi increased by 0.07% to $0.6106, whereas the Australian dollar declined by 0.13% to $0.6582.

Although the underlying trend continued to be consistent with a tight labor market, data released on Thursday indicated that the number of Individuals filing new claims for unemployment benefits jumped by the most in five months last week.

The U.S. dollar index decreased 0.12% to 105.12 when measured against a basket of currencies, but it still maintained its projected weekly gain of around 0.6%. It increased earlier in the week when Fed Chair Jerome Powell delivered a more pessimistic testimony than the markets had anticipated to the Senate Banking Committee during his semi-annual hearing.

The closely anticipated nonfarm payrolls report, which is due later on Friday and is the next significant data point, is now in the spotlight. This report may provide insight into the Fed’s upcoming monetary policy moves.

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